A fall in the money supply is likely to cause the interest rate to___________ and investment expenditure to___________ .

Name: A fall in the money supply is likely to cause the interest rate to___________ and investment expenditure to___________ .
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Question

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A fall in the money supply typically leads to higher interest rates as there is less money available for borrowing. Higher interest rates generally discourage investment expenditure, leading to a decrease.

A Fall in the Money Supply Is Likely to Cause