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A Decrease in the Money Supply Causes the Interest Rate

question 94

True/False

A decrease in the money supply causes the interest rate to rise so that investment rises.


Definitions:

Normal Balances

The side (debit or credit) on which increases to an account are recorded, depending on the type of account.

Total Assets

The sum of all assets owned by a company, reflected on the balance sheet, representing both current and non-current assets.

Cash Payment

The act of settling a debt or transaction by transferring money to another party.

Cash Account

A financial account that records cash transactions including receipts and payments.

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