If at some interest rate the quantity of money supplied is greater than the quantity of money demanded, what will people desire to do and what happens to the interest rate?
A) People will sell interest-bearing assets, causing the interest rate to decrease.
B) People will sell interest-bearing assets, causing the interest rate to increase.
C) People will buy interest-bearing assets, causing the interest rate to decrease.
D) People will buy interest-bearing assets, causing the interest rate to increase.

Question

Quizplus · Accepted Answer

When the quantity of money supplied is greater than the quantity demanded, people will buy interest-bearing assets to take advantage of the excess money, which increases the demand for these assets and causes the interest rate to decrease.

If at Some Interest Rate the Quantity of Money Supplied