What is the result of an increase in the money supply?
Multiple choice question.
Raised interest rate, increased investment and increased aggregate demand
Lower interest rate, increased investment and increased aggregate demand
Raised interest rate, increased investment and decreased aggregate demand
Lower interest rate, increased investment and decreased aggregate demand
1 answer
The correct answer is:
Lower interest rate, increased investment and increased aggregate demand
An increase in the money supply typically lowers interest rates, making borrowing cheaper, which encourages increased investment and leads to higher aggregate demand in the economy.
