farrukhsadiq

2)
If households are holding larger real money balances than they desire, which of the following is least likely?
A) The central bank must sell securities to absorb the excess money supply and establish equilibrium.
B) The interest rate is higher than its equilibrium rate in the market for real money balances.
C) The opportunity cost of holding money balances will decrease.
If households are holding more money than they desire, they will at least invest it at the risk free rate regardless of what rate it is.