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suppose the market for money, drawn with the value of money on the vertical axis and the quantity of money on the horizontal axis , is in equilibrium. if the money supply increases, then at the old value of money there is an a. excess demand for money that will result in an increase in spending. b. excess supply of money that will result in a decrease in spending. c. excess demand for money that will result in a decrease in spending. d. excess supply of money that will result in an increase in spending.

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aamirmajeed5100

d) If the money supply increases, then at the old value of money there is an excess supply of money that will result in an increase in spending.

Generally, when the amount of money available increases, interest rates decrease, which leads to greater investment and more money in consumers' hands, which in turn increases spending.

It follows that there will be more money available for the people in the economy to spend if the money supply rises. This ultimately causes the demand for products and services to rise in an economy.

Consequently, the appropriate choice will be ''an excess supply of money that will result in an increase in spending''

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