When the Federal Reserve increases the money supply,at the previous equilibrium interest rate households and firms will now have

Question

Quizplus · Accepted Answer

When the Federal Reserve increases the money supply, the supply of money in the economy increases and with the same demand for money, there will be an excess supply of money. This excess supply of money will result in households and firms having more money than they want to hold, which they will then seek to invest in other assets or spend, causing the interest rates to fall.

When the Federal Reserve Increases the Money Supply,at the Previous