A decrease in the interest rate will cause:

Name: A decrease in the interest rate will cause:
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Question

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When the interest rate decreases, it becomes cheaper to borrow money, so demand for money increases as individuals and businesses will want to take advantage of the lower cost of borrowing. Meanwhile, the central bank will typically increase the supply of money in order to reduce the interest rate further, hence an increase in the supply of central bank money.

A Decrease in the Interest Rate Will Cause