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Q: Supply of money remaining the same when there is an increase in demand for money, there will be
a) a fall in the level of prices
b) an increase in the rate of interest
c) a decrease in the rate of interest
d) an increase in the level of income and employment
Correct Answer: Option (b)
- If the demand increases when the supply is same, it will lead to an increase in prices or in this case rate of interest to be charged. Hence, option (b) is correct.
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