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In the money market,an increase in money supply will:
A) increase the demand for money at each interest rate.
B) decrease the demand for money at each interest rate.
C) encourage people to exchange money for interest-bearing assets.
D) encourage people to exchange interest-bearing assets for money.
E) increase the interest rate.
Money Supply
The total amount of money available in an economy at a specific time, including cash, coins, and balances held in bank accounts.
Interest-Bearing Assets
Investments or savings that earn interest over time, such as bonds, savings accounts, or loans.
Interest Rate
The percentage of a sum of money charged for its use, determining the cost of borrowing money or the return on savings and investments.
- Perceive how the availability of money, the demand for it, and interest rates are connected in the money market.
- Recognize the short-term and long-term effects of changes in the money supply.
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Learning Objectives
- Perceive how the availability of money, the demand for it, and interest rates are connected in the money market.
- Recognize the short-term and long-term effects of changes in the money supply.
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