If there is a rightward shift in the money supply curve, interest rates will

Question

Quizplus · Accepted Answer

A rightward shift in the money supply curve indicates an increase in the money supply. According to the liquidity preference theory, an increase in the money supply, with demand for money remaining constant, leads to a decrease in interest rates. This is because there is more money available for borrowing, which reduces the cost of borrowing, i.e., the interest rate.

If There Is a Rightward Shift in the Money Supply