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In the IS-LM model, what happens when there is an excess demand for money?
  • a)
    Interest rates rise
  • b)
    Interest rates fall
  • c)
    Investment spending increases
  • d)
    Investment spending decreases
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
In the IS-LM model, what happens when there is an excess demand for mo...
Excess demand for money leads to rising interest rates as people sell other assets to acquire more money.
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In the IS-LM model, what happens when there is an excess demand for money?a)Interest rates riseb)Interest rates fallc)Investment spending increasesd)Investment spending decreasesCorrect answer is option 'A'. Can you explain this answer?
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