In the short run, which of the following actions lower the interest rate?
A) a decrease in the demand for money
B) an increase in the demand for money
C) a decrease in the quantity of money
D) a decrease in bond prices

Question

Quizplus · Accepted Answer

A decrease in the demand for money leads to a lower interest rate because when people or businesses want to hold less money, they are more likely to deposit it in banks or invest it. This increases the supply of loanable funds, which typically lowers the interest rate.

In the Short Run, Which of the Following Actions Lower