In the short run, increases in the money supply growth rate will
A) decrease real interest rates.
B) increase real interest rates.
C) may increase or decrease real interest rates.
D) have no effect on real interest rates.

Question

Quizplus · Accepted Answer

In the short run, increases in the money supply growth rate typically decrease real interest rates because the additional liquidity in the economy makes borrowing cheaper, encouraging spending and investment.

In the Short Run, Increases in the Money Supply Growth