How do changes in interest rates affect the money supply?

2 answers:

algol132 years ago

5 0

The changes in interest rates affect the money supply because as interest rates fall, people generally hold more cash, restricting the money supply.

<h3>What are the effect of rise and fall of interest rates?</h3>

When there is a fall in interest rates its increases the amount of money people wish to hold while a rise in interest rates leads to a decreases that amount people wish to hold.

Therefore, the Option A is correct

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