If the quantity of money demanded is greater than the quantity of money supplied,then the interest rate will

Question

Quizplus · Accepted Answer

When the quantity of money demanded is greater than the quantity of money supplied, it creates a situation of excess demand for money. In such a situation, people would be willing to pay a higher price (interest rate) to borrow money, as there is a shortage of money. Therefore, the interest rate will rise to balance the demand and supply of money.

If the Quantity of Money Demanded Is Greater Than the Quantity