Suppose the money market,drawn with the value of money on the vertical axis,is in equilibrium.If the money supply increases,then at the old value of money there is an
A)excess demand for money that will result in an increase in spending.
B)excess demand for money that will result in a decrease in spending.
C)excess supply of money that will result in an increase in spending.
D)excess supply of money that will result in a decrease in spending.

Question

Quizplus · Accepted Answer

When the money supply increases, there is an excess supply of money at the old value of money, leading to increased spending as people have more money to spend.

Suppose the Money Market,drawn with the Value of Money on the Vertical