A rise in interest rates due to a decrease in the money supply will _____ aggregate demand.
A) reduce
B) not change
C) increase
D) cause random fluctuations in

Question

Quizplus · Accepted Answer

When interest rates rise due to a decrease in the money supply, borrowing money becomes more expensive. This leads to a decrease in consumption and investment spending, which ultimately reduces aggregate demand.

A Rise in Interest Rates Due to a Decrease in the Money