Use the following to answer questions:
-(Figure: Money Market I) Refer to Figure: Money Market I.If the interest rate is at i_L and the central bank neither buys nor sells Treasury bills,then the interest rate will:

Question

Use the following to answer questions:

-(Figure: Money Market I) Refer to Figure: Money Market I.If the interest rate is at i_L and the central bank neither buys nor sells Treasury bills,then the interest rate will:

Quizplus · Accepted Answer

If the central bank neither buys nor sells Treasury bills, this means there is no change in the supply of money in the economy. Therefore, the equilibrium interest rate will remain at i_E.

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