The ____ suggests that an increase in the growth rate in the money supply results in lower interest rates in
The short-run.
A) Fisher effect
B) Harrod-Keynes effect
C) GAP effect
D) Money-supply expectations effect
E) Money-supply liquidity effect

Question

Quizplus · Accepted Answer

The Money-supply liquidity effect suggests that an increase in the growth rate of the money supply will lead to lower interest rates in the short run, as the increased supply of money makes it more available for borrowing, thus reducing the cost of borrowing (interest rates).

The ____ Suggests That an Increase in the Growth Rate