It is possible that when the money supply rises, interest rate may_ if the_effect is more than offset by changes in income, the price level, and expected inflation

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Social Studies

Alina Chung

20 November, 00:05

It is possible that when the money supply rises, interest rate may_ if the_effect is more than offset by changes in income, the price level, and expected inflation

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Smudge · Answer 1

Answer: I. rise II liquidity

Explanation: This assertion was made by Milton Friedman.

Friedman was an American economist who received the 1976 Nobel Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the complexity of stabilization policy.

He formulated the theory of monetarism in 1967, he said that the solution to inflation was higher interest rates, which would reduce money supply. As this happens, prices will fall as people would have less money to spend thereby stabilising the ecomomy.