How do changes in interest rates affect the money supply?

a.

As interest rates fall, people generally hold more cash, restricting the money supply.

b.

As interest rates rise, people generally keep their wealth in assets that pay returns, expanding the money supply.

c.

As interest rates level off, people charge more and hold more cash, expanding the money supply.

d.

As interest rates rise, people generally keep their wealth in assets that pay returns, restricting the money supply.

Question

7 May, 19:40

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Lillian Little · Answer 1

I would say that as the interest rates get higher people charge more and hold more cash expanding their money supply