Changes in the quantity of money affect
A)interest rates
B)prices
C)production
D)All of the above are correct

Question

Quizplus · Accepted Answer

Changes in the quantity of money affect all three variables: interest rates, prices, and production. When the quantity of money increases, interest rates decrease, which encourages borrowing and investment and leads to increased production. However, an increase in the quantity of money can also lead to higher prices due to an increase in demand for goods and services. Conversely, when the quantity of money decreases, interest rates increase, which discourages borrowing and investment and leads to a decrease in production. Additionally, decreased money supply can lead to lower prices due to decreased demand for goods and services.

Changes in the Quantity of Money Affect