Question

b) Suppose that changing money market conditions result in an interest rate higher than the equilibrium rate then: O portfolio mangers will neither buy nor sell bonds sell bonds and thus maintain the mix of money balances and bonds in their portfolios. O portfolio managers will sell bonds and thus reduce the money balances in their portfolios. O portfolio managers will sell bonds and thus increase the money balances in their portfolios. O portfolio managers will buy bonds and thus reduce the money balances in their portfolios. c) Interest rate i i? Mo/P L(Y?) Mo/P L? Real money balances If the money market in the diagram is not in equilibrium at the interest rate i?: O portfolio managers with be content with their holdings of bonds and money balances because low interest rates a good for consumers. O portfolio managers will sell bonds to increase their money holdings, pushing bond prices down and interest rates up until equilibrium is reached. O portfolio managers will lobby banks and central banks to increase their lending, deposits and the money supply. O portfolio managers will buy bonds to increase their bond holdings, pushing bond prices up and interest rates down until equilibrium is established.

          b) Suppose that changing money market conditions result in an interest rate higher than the equilibrium rate then:
O portfolio mangers will neither buy nor sell bonds sell bonds and thus maintain the mix of money balances and bonds in their portfolios.
O portfolio managers will sell bonds and thus reduce the money balances in their portfolios.
O portfolio managers will sell bonds and thus increase the money balances in their portfolios.
O portfolio managers will buy bonds and thus reduce the money balances in their portfolios.
c)
Interest rate i
i?
Mo/P
L(Y?)
Mo/P L?
Real money balances
If the money market in the diagram is not in equilibrium at the interest rate i?:
O portfolio managers with be content with their holdings of bonds and money balances because low interest rates a good for consumers.
O portfolio managers will sell bonds to increase their money holdings, pushing bond prices down and interest rates up until equilibrium is reached.
O portfolio managers will lobby banks and central banks to increase their lending, deposits and the money supply.
O portfolio managers will buy bonds to increase their bond holdings, pushing bond prices up and interest rates down until equilibrium is established.

b) Suppose that changing money market conditions result in an interest rate higher than the equilibrium rate then:
O portfolio mangers will neither buy nor sell bonds sell bonds and thus maintain the mix of money balances and bonds in their portfolios.
O portfolio managers will sell bonds and thus reduce the money balances in their portfolios.
O portfolio managers will sell bonds and thus increase the money balances in their portfolios.
O portfolio managers will buy bonds and thus reduce the money balances in their portfolios.
c)
Interest rate i
i?
Mo/P
L(Y?)
Mo/P L?
Real money balances
If the money market in the diagram is not in equilibrium at the interest rate i?:
O portfolio managers with be content with their holdings of bonds and money balances because low interest rates a good for consumers.
O portfolio managers will sell bonds to increase their money holdings, pushing bond prices down and interest rates up until equilibrium is reached.
O portfolio managers will lobby banks and central banks to increase their lending, deposits and the money supply.
O portfolio managers will buy bonds to increase their bond holdings, pushing bond prices up and interest rates down until equilibrium is established.

Added by Dawn J.

Question

Please give Ace some feedback