Answer to Question #208641 in Macroeconomics for Deba

Question

What will be the rate of interest if money supply increase

Answer 1

An increase in the money supply will decrease the overall interest rate in a given economy. A decline in the supply of money, on the other hand, will result in a rise in the economy's overall interest rates. A growing money supply decreases interest rates, making borrowing inexpensive for borrowers. On the other hand, a smaller money supply tends to increase market interest rates, making borrowing more expensive for borrowers.