For other non-price conditions, decrease in equilibrium interest rate leads to

A. increase restrictiveness

B. decrease restrictiveness

C. zero restrictiveness

D. negative restriction

Answer: Option A

Solution(By Examveda Team)

For other non-price conditions, decrease in equilibrium interest rate leads to increase restrictiveness. The equilibrium interest rate is the rate at which the quantity of money demanded is equal to the quantity of money supplied. The Federal Reserve can alter the equilibrium interest rate by adjusting the supply of money. The demand for money and supply of money can be graphed to determine the equilibrium interest rate.