When the interest rate falls in the money market, the quantity of money demanded and the quantity of money supplied .

Question

Quizplus · Accepted Answer

When the interest rate falls, the quantity of money demanded increases because people prefer to hold more cash due to the lower opportunity cost of holding money. The quantity of money supplied stays the same because it is determined by the central bank and not directly affected by interest rate changes.

When the Interest Rate Falls in the Money Market, the Quantity