If projected money supply growth exceeds projected GNP growth, interest rates are likely to:
A) Rise
B) Fall
C) Remain stable unless inflation (the Fisher effect) intervenes
D) Remain unchanged unless the business cycle turns downward with slower GNP growth
E) None of the above

Question

Quizplus · Accepted Answer

When money supply growth exceeds GNP growth, there is more money available relative to the output of goods and services, which typically leads to lower interest rates as there is more money available for lending.

If Projected Money Supply Growth Exceeds Projected GNP Growth, Interest