In the short run,a decrease in the money supply will lead to a(n):
A)decrease in Gross Domestic Product.
B)increase in the price level.
C)increase in aggregate demand.
D)increase in the demand for money.
E)decrease in the market interest rate.

Question

Quizplus · Accepted Answer

A decrease in the money supply typically leads to higher interest rates, which reduces investment and consumption, thereby decreasing Gross Domestic Product (GDP) in the short run.

In the Short Run,a Decrease in the Money Supply Will