In the short run,a decrease in the money supply causes interest rates to
A)increase,and aggregate demand to shift right.
B)increase,and aggregate demand to shift left.
C)decrease,and aggregate demand to shift right.
D)decrease,and aggregate demand to shift left.

Question

Quizplus · Accepted Answer

A decrease in the money supply leads to higher interest rates as there is less money available for borrowing. Higher interest rates typically reduce investment and consumer spending, causing aggregate demand to shift left.

In the Short Run,a Decrease in the Money Supply Causes