An increase in the money supply will
A)increase interest rates, decreasing investment and aggregate demand.
B)reduce interest rates, increasing investment and aggregate demand.
C)reduce interest rates, decreasing investment and increasing aggregate demand.
D)increase interest rates, increasing investment and aggregate demand.

Question

Quizplus · Accepted Answer

An increase in the money supply typically reduces interest rates because more money is available for lending. Lower interest rates make borrowing cheaper, which can encourage investment and increase aggregate demand.

An Increase in the Money Supply Will