Homework Answers
Answer) (c) This could have been created by an increase in the money supply. The value of money will fall.
Reason) Surplus in the money market is created when money supply increase. The more will be the money in the market, the less will be its value and purchasing power will fall. Hence the correct answer is (c).
Options (b) and (d) are not right because they talk about a decrease in the money supply which is not feasible given the fact that there is surplus in the money market. Option (a) says that the value of money will rise, however, the value of money will decrease hence it is incorrect.
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