When there is an excess supply of money,
A)people will try to get rid of money causing interest rates to rise.Investment increases.
B)people will try to get rid of money causing interest rates to fall.Investment decreases.
C)people will try to get rid of money causing interest rates to fall.Investment increases.
D)people will try to get rid of money causing interest rates to rise.Investment decreases.

Question

Quizplus · Accepted Answer

When there is an excess supply of money, people will try to get rid of their excess money by investing or lending it, which increases the supply of loanable funds. This increased supply leads to lower interest rates, making borrowing cheaper and encouraging more investment.

When There Is an Excess Supply of Money