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Supply of money remaining the same when there is an increase in demand for money, there will be


[2013]

  • a)
    A fall in the level of prices

  • b)
    A decrease in the rate of interest

  • c)
    An increase in the rate of interest

  • d)
    An increase in the level of income and employment

Correct answer is option 'C'. Can you explain this answer?
Verified Answer
Supply of money remaining the same when there is an increase in demand...
Explanation: When the demand for money increases while the supply remains the same, it creates a shortage of money in the market. To balance this shortage, the rate of interest will increase. This is because when the demand for money is high, people are willing to borrow money at higher interest rates, and lenders are willing to lend money at higher interest rates to earn more profit.
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Supply of money remaining the same when there is an increase in demand for money, there will be[2013]a)A fall in the level of pricesb)A decrease in the rate of interestc)An increase in the rate of interestd)An increase in the level of income and employmentCorrect answer is option 'C'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Supply of money remaining the same when there is an increase in demand for money, there will be[2013]a)A fall in the level of pricesb)A decrease in the rate of interestc)An increase in the rate of interestd)An increase in the level of income and employmentCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Supply of money remaining the same when there is an increase in demand for money, there will be[2013]a)A fall in the level of pricesb)A decrease in the rate of interestc)An increase in the rate of interestd)An increase in the level of income and employmentCorrect answer is option 'C'. Can you explain this answer?.
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