Question

quilibrium in the money market exists when a. excess demand for money is equal to the quantity demanded of money at a given interest rate. b. excess supply of money is equal to the quantity demanded of money at a given interest rate. c. the supply of money curve intersects the demand for money curve at the prevailing interest rate. d. the demand for money curve is vertical, but not when the demand for money curve is downward-sloping

Answer 1

Answer: b. excess supply of money is equal to the quantity demanded of money at a given interest rate.

Explanation:

Equilibrium in the money market takes is usually achieved when the quantity of money demanded is equal to the quantity supplied. The demand curve for money is used to illustrate the quantity of money demanded at a given interest rate. The demand curve for money usually sloped downward, what this tells us is that people would want to hold less of their wealth in the form of physical cash ( money ). When the interest rates on bonds and other alternative investments are way higher.