A decrease in the money supply creates an excess a. demand for money that is eliminated by rising prices. b. demand for money that is eliminated by falling prices. c. supply of money that is eliminated by rising prices. d. supply of money that is eliminated by falling prices.

Respuesta :

Answer:

b. demand for money that is eliminated by falling prices.

Explanation:

Whenever there is decrease in the supply of money, people's capacity to spend is also decreased as people do not hold money. Accordingly there is increase in supply as there is increase in stock of goods, because people cannot purchase it.

Accordingly vendors are ready to sell the goods even at a lower price, and then the prices of the goods fall. After that people with low money also tend to buy the goods.

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