Which of the following statements about the demand and supply of money is most accurate? People who are:
A)holding money when interest rates are lower will try to increase their money balances and, as a result, the supply of money increases.
B)holding money when interest rates are higher will try to reduce their money balances and, as a result, the demand for money decreases
C)buying bonds to reduce their money balances will increase the demand for bonds with an associated increase in interest rates.
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答案 B
Buying bonds would drive bond prices up and interest rates down. Selling bonds would have the opposite effect; driving bond prices down and interest rates up. When interest rates are lower, there is an excess demand for money. The supply of money is determined by the monetary authorities.
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