-Refer to the above market for money diagram.If the interest rate was at 8 percent,people would:
A) sell bonds,which would cause bond prices to fall and the interest rate to fall.
B) buy bonds,which would cause bond prices to rise and the interest rate to fall.
C) have insufficient liquidity,which would cause them to reduce their spending on consumer goods.
D) buy bonds,which would cause bond prices to fall and the interest rate to rise.

Question

-Refer to the above market for money diagram.If the interest rate was at 8 percent,people would:
A) sell bonds,which would cause bond prices to fall and the interest rate to fall. 
B) buy bonds,which would cause bond prices to rise and the interest rate to fall. 
C) have insufficient liquidity,which would cause them to reduce their spending on consumer goods. 
D) buy bonds,which would cause bond prices to fall and the interest rate to rise.

Quizplus · Accepted Answer

If the interest rate is at 8 percent and is considered high, people would buy bonds to take advantage of the high returns, causing bond prices to rise and the interest rate to fall.

-Refer to the Above Market for Money Diagram