What will happen to the equilibrium interest rate when both money supply and nominal aggregate output decrease?

Question

Quizplus · Accepted Answer

When both money supply and nominal aggregate output decrease, the effect on the equilibrium interest rate is ambiguous because the decrease in money supply tends to increase interest rates, while the decrease in nominal aggregate output tends to decrease interest rates. The net effect depends on the relative magnitudes of these changes.

What Will Happen to the Equilibrium Interest Rate When Both