PYQ 2013 Q35 · RaahUPSC PYQ

2013 · EconomyPrevious Year Question

Q35.

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

Answer

B

Explanation

If demand for money increases while supply remains the same, it will lead to an increase in prices or in this case, the rate of interest to be charged will increase.