The money market equilibrium is defined as?

A. when the demand and supply of money are equal
B. when demand is greater than supply of money
C. when demand is less than supply of money
D. when supply is greater than demand for money

Correct Answer: Option A

A. when the demand and supply of money are equal

Explanation

The money market is in equilibrium when the demand & supply of money are equal i.e L = μ
where L = money demand, μ = money supply
Thus μ = LT(γ) + Ls(r)