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Question:

Which of the following statements regarding the money supply and determination of short-term interest rates is least accurate?

A An increase in the real money supply from an initial equilibrium situation will cause households and businesses to sell interest-bearing securities.
explanation

From an initial equilibrium, an increase in real money balances will leave households and businesses with more money than they wish to hold, so they will purchase interest-bearing securities, driving their prices up and yields down until a new equilibrium short term rate is established.

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