All else constant, an increase in the supply of money will lead to _______

Question

Quizplus · Accepted Answer

An increase in the supply of money will lead to an increase in the equilibrium quantity of money. This is because the supply of money is the amount of money that is available in the economy, and an increase in the supply of money will make more money available to people. As a result, people will be more likely to spend money, which will lead to an increase in the equilibrium quantity of money.An increase in the supply of money will also lead to a decrease in the equilibrium price of bonds. This is because the price of bonds is inversely related to the supply of money. When the supply of money increases, the price of bonds will decrease. This is because when there is more money available, people are less likely to buy bonds, which will lead to a decrease in the price of bonds.

All Else Constant, an Increase in the Supply of Money