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if the demand for money and the supply of money both decrease, the equilibrium: group of answer choices quantity of money will increase, but we cannot predict the change in the equilibrium interest rate. quantity of money and the equilibrium interest rate will both increase. interest rate will decline, but we cannot predict the change in the equilibrium quantity of money. quantity of money will decline, but we cannot predict the change in the equilibrium interest rate.

Answer :

The equilibrium amount of money will decrease if both the supply and demand for money fall, but the equilibrium interest rate cannot be predicted to vary.

The macroeconomic profile of a nation is significantly influenced by its money supply, notably in regard to interest rates, inflation, and the business cycle. The Federal Reserve controls the amount of money available in America.

Interest rates increase and borrowing becomes more expensive when the Fed adopts a contractionary or hawkish monetary policy to control the money supply. While this may lessen inflationary pressures, it also runs the danger of stalling the economic expansion of the concerned nation.

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