An excess quantity of money demanded will lead to a rise in

Name: An excess quantity of money demanded will lead to a rise in
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Question

Quizplus · Accepted Answer

When the quantity of money demanded exceeds the supply of money, individuals and firms will compete for the limited supply of loans, driving up the interest rate. This increase in interest rates will help to reduce the amount of money demanded until it is in equilibrium with the supply of money. Therefore, an excess quantity of money demanded leads to a rise in interest rates.

An Excess Quantity of Money Demanded Will Lead to a Rise