What is the impact on nominal interest rates and investment spending when the money supply increases,other things being equal?
A)nominal interest rates rise, and investment spending rises
B)nominal interest rates fall, and investment spending rises
C)nominal interest rates rise, and investment spending falls
D)nominal interest rates fall, and investment spending falls

Question

Quizplus · Accepted Answer

An increase in the money supply leads to a decrease in nominal interest rates due to the increased availability of funds. Lower interest rates reduce the cost of borrowing, prompting individuals and businesses to borrow more, which increases investment spending.

What Is the Impact on Nominal Interest Rates and Investment