An increase in the money supply will tend to

Question

Quizplus · Accepted Answer

An increase in the money supply will lead to a decrease in interest rates due to an increase in the supply of loanable funds. Lower interest rates will in turn stimulate investment and consumption expenditures, leading to an increase in the equilibrium GDP. Therefore, choice B is the correct answer. Choices A, C, and D are incorrect. Choice E is also incorrect as there will be an impact on the economy when the money supply increases.

An Increase in the Money Supply Will Tend to