An increase in the money supply:
A. Raises the interest rate, causing a decrease in investment and a decrease in GDP
B. Lowers the interest rate, causing an increase in investment and a decrease in GDP
C. Raises the interest rate, causing an increase in investment an increase in GDP
D. Lowers the interest rate, causing a decrease in investment an increase in GDP
E. Lowers the interest rate, causing an increase in investment and an increase in GDP
E. Lowers the interest rate, causing an increase in investment and an increase in GDP
When there is an increase in the money supply, it typically leads to lower interest rates as a result of greater supply of money available for lending. Lower interest rates encourage businesses and individuals to borrow and invest, leading to an increase in investment and spending, consequently boosting economic activity and GDP.