An increase in the supply of cash on the overnight money market will lead to a(n)____________ in interest rates and a(n)_________ in investment expenditure.

Question

Quizplus · Accepted Answer

An increase in the supply of cash on the overnight money market will lead to a decrease in interest rates, as there is more cash available for borrowing, which reduces the cost of borrowing. This decrease in interest rates would lead to an increase in investment expenditure as firms can borrow money at a lower cost, incentivizing them to invest in more projects.

An Increase in the Supply of Cash on the Overnight