Assume that money demand is a function of real interest rate and income. When the central bank announces that it will sell government bonds one year from now, which of the following events is/are likely to happen in the current year? (i) Lower price level (ii) Lower nominal interest rate (iii) Lower demand for real money balances Oa. Only (ii) and (iii). O b. O c. O d. Only (i) and (ii). (i), (ii), and (iii) are all going to happen in the current year. Only (iii).

Assume that money demand is a function of real interest rate and income. When the central bank announces that it will sell government bonds one year from now, which of the following events is/are likely to happen in the current year? (i) Lower price level (ii) Lower nominal interest rate (iii) Lower demand for real money balances Oa. Only (ii) and (iii). O b. O c. O d. Only (i) and (ii). (i), (ii), and (iii) are all going to happen in the current year. Only (iii).

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781305971509

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 5CQQ

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