If households are holding larger real money balances than they desire, which of the following is least likely? A. The interest rate is higher than its equilibrium rate in the market for real money balances. B. The opportunity cost of holding money balances will decrease. C. The central bank must sell securities to absorb the excess money supply and establish equilibrium. The answer is C with the following explanation: If households’ real money balances are larger than they desire, the interest rate (opportunity cost of holding money balances) is higher than its equilibrium rate. Households will use their undesired excess cash to buy securities, bidding up securities prices and reducing the interest rate toward equilibrium. This market process does not require any action by the central bank. However, i dont understand why A and B are wrong. I think that if real money balances is larger means that the interest rate are low and the cost of holding money is low already? So why A and B is true if household are holding larger real money balances ? Thank you very much