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What is the effect of decrease of money supply on the interest rate?

      

What is the effect of decrease of money supply on the interest rate?

  

Answers


Dana
Decrease in money demand supply leads to a rise in interest rate. This will decrease investment. Depending on the interest elasticity of the investment function and the value of the investment multiplier, therefore, monetary policy can help reduce unemployment and expand output in the economy.

Dana05 answered the question on August 14, 2019 at 07:26


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