If autonomous consumption increases and the money supply increases, it is possible that the equilibrium interest rate will rise.

Question

Quizplus · Accepted Answer

An increase in autonomous consumption can lead to higher demand for goods and services, potentially causing inflationary pressures. To combat inflation, central banks may increase interest rates. Additionally, an increase in the money supply can initially lower interest rates, but if it leads to higher inflation expectations, the central bank might raise interest rates to stabilize the economy, making it possible for the equilibrium interest rate to rise.

If Autonomous Consumption Increases and the Money Supply Increases, It