Monetary policy that increases the amount of money in circulation:
A) will cause an increase in interest rates and an increase in aggregate demand.
B) will cause a decrease in interest rates and an increase in aggregate demand.
C) will cause an increase in interest rates and a decrease in aggregate demand.
D) will cause a decrease in interest rates and a decrease in aggregate demand.

Question

Quizplus · Accepted Answer

Increasing the money supply typically lowers interest rates, making borrowing cheaper, which can boost spending and investment, thus increasing aggregate demand.

Monetary Policy That Increases the Amount of Money in Circulation