Which of the following is not true at the equilibrium rate of interest?
A)The quantity of money demanded is equal to the quantity of money supplied.
B)People are willing to hold as much money as is currently supplied.
C)There is no incentive for money owners to adjust their portfolios.
D)There is a tendency for the money demand curve to shift to the right.

Question

Quizplus · Accepted Answer

At the equilibrium rate of interest, the quantity of money demanded is equal to the quantity of money supplied, and people are willing to hold as much money as is currently supplied. In addition, there is no incentive for money owners to adjust their portfolios because they are already holding the amount of money they desire. However, there is no tendency for the money demand curve to shift at the equilibrium rate of interest because the quantity demanded and supplied are already perfectly matched. Therefore, D is not true at the equilibrium rate of interest.

Which of the Following Is Not True at the Equilibrium