Using the money demand and money supply model,an increase in money demand would cause the equilibrium interest rate to
A)decrease.
B)increase.
C)not change.
D)increase,then decrease.

Question

Quizplus · Accepted Answer

An increase in money demand shifts the demand curve for money to the right, causing an increase in the equilibrium interest rate. This occurs because individuals and firms are willing to pay a higher interest rate to obtain the desired money balance.

Using the Money Demand and Money Supply Model,an Increase in Money