Question

In Exhibit 20-3, assume an equilibrium with an interest rate of 15 percent and the money supply at $100 billion. The Fed uses its policy tools to move the economy to a new equilibrium at E2 with money supply of $150 billion and an interest rate of 10 percent. This change could be the result of a(n):

Answer 1

Answer Choices:

A.price of bonds to rise.

B.price of bonds to remain unchanged.

C.price of bonds to fall.

D.none of the above.

Answer:

A