The supply-of-money curve is almost perfectly inelastic because:
A) as interest rates rise, people will want to be supplied with more loans.
B) the Fed makes more money available in response to higher interest rates.
C) banks generally find loans more profitable than keeping their assets as cash in their vaults or reserve deposits at the Fed, whether interest rates are 4% or 40%.
D) the Fed lowers the discount rate as interest rates rise.
Correct Answer:
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