If the economy is currently in monetary equilibrium, an increase in the money supply will
A) cause an excess demand for money and a decrease in the rate of interest.
B) cause a reduction in the demand for money, leading to a higher rate of interest.
C) not change the equilibrium conditions.
D) lead to a movement down the money demand curve to a lower rate of interest.
E) cause an increase in the demand for money, leading to a lower rate of interest.
Correct Answer:
Verified
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