In the money market, if there is excess. real money balances, then that means the real interest ratethe equilibrium interest rate.isO a. supply of; lower thanO b.demand for; lower thanO c. supply of; equal toO d. demand for; higher than

Equilibrium in the market occurs at the intersection of demand and supply of real money balances…

In the money market, if there is excess is _________ the equilibrium interest rate. O a. supply of; lower than O b. demand for; lower than O c. supply of; equal to O d. demand for; higher than real money balances, then that means the real interest rate

In the money market, if there is excess is _________ the equilibrium interest rate. O a. supply of; lower than O b. demand for; lower than O c. supply of; equal to O d. demand for; higher than real money balances, then that means the real interest rate

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Money Growth And Inflation

Section: Chapter Questions

Problem 5CQQ

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

In the money market, if there is excess. real money balances, then that means the real interest rate
the equilibrium interest rate.
is
O a. supply of; lower than
O b.
demand for; lower than
O c. supply of; equal to
O d. demand for; higher than

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