What impact will an increase in the money supply have on the economy?

Question

Quizplus · Accepted Answer

An increase in the money supply will likely lead to an increase in demand for goods and services, which can lead to inflation if the economy is already operating at its full potential. When there is high demand for goods but limited supply, prices tend to rise.

Answer: D
 An increase in the money supply can lead to an increase in the supply of loanable funds, which can lead to a decrease in interest rates. This can encourage borrowing and investment, but also contribute to inflationary pressures. However, this is not a definite outcome and can depend on various factors such as the state of the economy and monetary policy.

What Impact Will an Increase in the Money Supply Have