Final answer:
Increases in the money supply generally lead to increased demand for investment and consumption in the short run and higher prices in the long run; the correct answer is A. increase; increase.
Step-by-step explanation:
The question at hand is concerned with how changes in the money supply affect economic indicators such as investment, consumption, and prices. Specifically, increases in the money supply tend to increase demand for investment and consumption goods in the short run because individuals and businesses have more money to spend, thereby stimulating economic activity. In the long run, however, this can lead to inflation, which is an increase in price levels. Thus, the correct answer to the question is A. increase; increase.
Regarding the financial market changes, a rise in supply of money, such as from central banks, would lead to an increase in the quantity of loans made and received because banks have more money to lend. Similarly, a rise in supply will lead to a decline in interest rates because there is more money available to lend, which typically lowers the cost of borrowing.