Ceteris paribus,an increase in the money supply will lower short-term interest rates.

Name: Ceteris paribus,an increase in the money supply will lower short-term interest rates.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When the money supply increases, the demand for loans also increases, which in turn lowers the interest rates as the supply of money is now greater than the demand for it. Therefore, ceteris paribus, an increase in the money supply will lower short-term interest rates.

Ceteris Paribus,an Increase in the Money Supply Will Lower Short-Term