An increase in the supply of money will lead to a(n) _____ in the equilibrium interest rate and a(n) _____ in real GDP.

Question

Quizplus · Accepted Answer

An increase in the supply of money typically leads to a decrease in the equilibrium interest rate because more money is available for lending. Lower interest rates make borrowing cheaper, encouraging investment and spending, which in turn can lead to an increase in real GDP.

An Increase in the Supply of Money Will Lead to A(n)