Question

If, in the market for money, the amount of money supplied exceeds the amount of money households and businesses want to hold, the interest rate will
a) rise, causing households and businesses to hold less money.
b) fall, causing households and businesses to hold less money
c) fall, causing households and businesses to hold more money
d) rise, causing households and businesses to hold more money.

Answer 1

If, in the market for money, the amount of money supplied exceeds the amount of money households and businesses want to hold, the interest rate will  rise, causing households and businesses to hold less money.

Option A

Explanation:

Fiscal policy is the central bank's macroeconomic policy. This covers the supply of money and interest rate control and is also the demand-side economic strategy of a country's government for achieving macroeconomic targets such as inflation, investment, productivity, and liquidity.

If the required quantity is above the amount given, people sell the property to obtain money like bonds. It leads to an increase in bond supply, a drop in bond prices and a higher market interest rate. If the volume supplied meets the necessary number, capital is increasing by purchasing a certain property, such as bonds.

The supply of money meets the demand for money, and the real rate of interest is higher than the number of equilibrium.