If the interest rate is below the equilibrium interest rate,then the quantity __________ of money exceeds the quantity __________ of money,and there is a __________ of money.
A) supplied; demanded; shortage
B) supplied; demanded; surplus
C) demanded; supplied; shortage
D) demanded; supplied; surplus

Question

Quizplus · Accepted Answer

If the interest rate is below the equilibrium interest rate, the quantity demanded of money exceeds the quantity supplied, leading to a shortage of money. This is because lower interest rates make borrowing more attractive, increasing the demand for money, while the supply remains unchanged.

If the Interest Rate Is Below the Equilibrium Interest Rate,then