Can anyone helps to explain the links between changes in the nations money supply the

tonynk9 · #1 Apr 13, 2008, 05:39 AM

Can anyone helps to explain the links between changes in the nations money supply the interest rate investment spending aggregate demand and real GDP and the price level?

excon · Apr 13, 2008, 06:17 AM

Hello tony:

Homework???? My answer ain't gonna get you a good grade.

I can tell you that interest rate is the cost of money. When money is in short supply, it costs more. When there's a lot of it around, it costs less.

Now, I'm not familiar with fancy words like "investment spending aggregate" or real GDP. All I know is when you increase the money supply without a corresponding increases in goods and services, prices go up.

excon



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