If the quantity of money supplied exceeds the quantity of money demanded,at a point in time:
A)the price level in the economy will fall.
B)the equilibrium interest rate will fall.
C)the money demand curve will shift to the right.
D)the money demand curve will shift to the left.

Question

Quizplus · Accepted Answer

When the quantity of money supplied exceeds the quantity of money demanded, the surplus of money leads to lower interest rates as banks and other financial institutions have more funds to lend. This is because, in an attempt to encourage borrowing and restore equilibrium, the interest rate will be adjusted downwards.

If the Quantity of Money Supplied Exceeds the Quantity of Money