Question

If, at some interest rate, the quantity of money supplied is less than the quantity of money demanded, people will desire to a. sell interest-bearing assets, causing the interest rate to increase. b. sell interest-bearing assets, causing the interest rate to decrease. c. buy interest-bearing assets, causing the interest rate to decrease. d. buy interest-bearing assets, causing the interest rate to increase.

Answer 1

Answer:

c. buy interest-bearing assets causing the interest rate to decrease.

Explanation:

Interest means a remuneration paid to the lender, the lender. The borrowed resources are left available to the borrower, called the borrower, for a period.

Interest is then understood to mean the “premium” paid to the lender for not having used these resources for a period of time for the borrower to use. Interest is the remuneration paid for the capital that is borrowed. The interest rate, in turn, is the relationship that exists between the interest received by the lender and how much of the resource was borrowed.

Within this context, it may happen that within the interest rate, the amount of money provided is less than the amount of money required. When this happens people will tend to buy interest-bearing assets, causing the interest rate to fall.