An excess demand for money will result in all the following, except:
A)an excess supply of bonds.
B)a rise in investment spending.
C)a fall in bond prices.
D)a fall in consumption spending.
E)a fall in equilibrium real GDP.

Question

Quizplus · Accepted Answer

An excess demand for money will lead to a fall in investment spending rather than a rise, as individuals and firms are holding onto their money rather than investing it. Therefore, option B is the exception. Options A, C, D, and E are all correct as they describe the effects of an excess demand for money.

An Excess Demand for Money Will Result in All the Following