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An Increase in the Supply of Money with No Change

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Multiple Choice

An increase in the supply of money with no change in demand will lead to a(n) _____ in the equilibrium quantity of money and a _____ in the equilibrium interest rate.


Definitions:

Surplus

The situation in which the quantity of goods produced exceeds the quantity of goods demanded. Surpluses can result in price drops for products or services, reflecting a mismatch in supply and demand.

Price Ceiling

A cap set by authorities on the maximum price for a good or service, aimed at safeguarding consumers.

Price Floor

A minimum price set by the government or other agency, below which a product cannot legally be sold.

Shortage

A situation where the demand for a product or service exceeds the supply available.

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