Question

Select the items that describe what most likely happens when the Federal Reserve increases the money supply (and people are confident in the economy).


Interest rates rise.


Businesses borrow more money.


Consumption increases.


Interest rates fall.

Answer 1

An increase in money supply causes interest rates to drop and makes more money available for customers to borrow from banks. ~ http://www.wisegeek.com/what-are-the-effects-of-an-increase-in-money-supply.htm

Answer 2

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