Which one of the following statements is the MOST accurate?

Question

Quizplus · Accepted Answer

The most accurate statement is that an increase in the money supply lowers the interest rate while a fall in the money supply raises the interest rate, given both the price level and output. This is because an increase in the money supply leads to an increase in demand for goods and services, which pushes up prices and, in turn, increases the demand for money. As the demand for money increases, the interest rate decreases. Conversely, a fall in the money supply reduces demand for goods and services, leading to lower prices and lower demand for money. As a result, the interest rate increases. Therefore, the correct choice is D.

Which One of the Following Statements Is the MOST Accurate