When the supply of money remains constant while there is an increase in the demand for money, people compete to hold onto limited cash, leading to an upward pressure on interest rates. This is because lenders can charge more for loans, as borrowers are willing to pay higher rates for the limited funds available. Consequently, higher interest rates act as a mechanism to balance the increased demand for money with the fixed supply, illustrating the fundamental relationship between money supply, demand, and interest rates in monetary economics, as detailed in standard UPSC resources.