Equilibrium in the money market exists when
A) at a given interest rate,excess supply of money is equal to the quantity demanded of money.
B) at a given interest rate,excess demand for money is equal to the quantity demanded of money.
C) the supply of money curve intersects the demand for money curve at the prevailing interest rate.
D) b and c

Question

Quizplus · Accepted Answer

Equilibrium in the money market occurs when the supply of money intersects with the demand for money at a specific interest rate. At this point, the quantity of money demanded is equal to the quantity supplied, and there is no excess supply or demand for money. Therefore, choice C, which states that the supply of money curve intersects with the demand for money curve at the prevailing interest rate, is the correct answer. Choices A and B are incorrect because they describe situations with either an excess supply or excess demand for money, which would lead to an imbalance in the money market. Choice D is also incorrect because it includes choice B, which is not a correct statement.

Equilibrium in the Money Market Exists When