D Question 3 1 pts Refer to the table below. Suppose the money supply is decreas

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D Question 3 1 pts Refer to the table below. Suppose the money supply is decreased from 400 billion dollars to 300 billion dollars. What will happen to the equilibrium interest rate after the decrease? Interest Rate Total Demand for Money 7% 6% 5% 4% $200 $300 $400 $500 O Rise from 4% to 6%. O Rise from 5% to 6%. O Fall from 6% to 5%. O Fall from 6% to 4%. Question 4 1 pts If bond prices decrease, then the O interest rate will decrease. O interest rate will increase O transaction demand for money will decrease. O transactions demand for money will increase.

Explanation / Answer

Answer.)

Q3.) Rise from 5% to 6%

Note in table interest rate when demand for money goes down from $400 billion to $300 billion.

Q4.) interest rate will increase

Bond prices decrease when interest rates increase because the fixed interest and principal payments stated in the bond will become less attractive to investors.

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