When households and firms sell financial assets,such as government securities,the

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When households and firms sell financial assets, the supply of financial assets increases and the demand for money increases as individuals receive payment for these assets. This leads to an increase in the nominal interest rate as the price of borrowing money increases due to the increased demand. Therefore, the correct answer is (C) nominal interest rate rises.

When Households and Firms Sell Financial Assets,such as Government Securities,the