Money Banking

Supply of money remaining the same when there is an increase in demand for money, there will be

  1. a fall in the level of prices
  2. an increase in the rate of interest
  3. a decrease in the rate of interest
  4. an increase in the level of income and employment

Answer

With increase in demand for money, people will deposit less money in banks. Hence, banks will increase rate of interest to attract people to deposit money in bank.

The correct option is B.