A decrease in the money stock by the Federal Reserve
A) shifts the supply of loanable funds to the left, decreasing interest rates.
B) shifts the demand for loanable funds to the left, increasing interest rates.
C) shifts the supply of loanable funds to the left, increasing interest rates.
D) shifts the supply of loanable funds to the right, increasing interest rates.

Question

Quizplus · Accepted Answer

A decrease in the money stock reduces the supply of loanable funds, shifting it to the left, which typically leads to higher interest rates.

A Decrease in the Money Stock by the Federal Reserve