Suppose the supply of money declines by $100 billion. The equilibrium interest rate would: a) Fall, since
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Question:
Suppose the supply of money declines by $100 billion. The equilibrium interest rate would:
a) Fall, since the amount of money demanded for transactions would rise and the amount of money demanded as an asset would decline.
b) Rise, since the amount of money demanded for transactions and as an asset would decline.
c) Fall, since the amount of money demanded for transactions and as an asset would both increase.
d) Rise, since the amount of money demanded for transactions would be largely unchanged or would increase and the amount of money demanded as an asset would fall.
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