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Figure: Equilibrium in the Money Market
-(Figure: Equilibrium in the Money Market) Look at the figure Equilibrium in the Money Market. If the rate of interest is below equilibrium, there will be an excess _____ money and the interest rate will _____.

Question

Use the following to answer questions :
Figure: Equilibrium in the Money Market 
-(Figure: Equilibrium in the Money Market) Look at the figure Equilibrium in the Money Market. If the rate of interest is below equilibrium, there will be an excess _____ money and the interest rate will _____.

Quizplus · Accepted Answer

If the interest rate is below equilibrium, the demand for money exceeds the supply, leading to an excess demand for money. As a result, the interest rate will rise to reach equilibrium.

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