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JAMB Economics 2000 Question 41

Question 41

Money and Inflation

An increase in money supply, other things being equal, will

  1. A.lower interest rates
  2. B.reduce income
  3. C.ensure trade balance
  4. D.increase money demand.
Show the answer and explanation

Answer: A (lower interest rates)

Explanation

When more money is available to lend, its price, the interest rate, falls.