Which Is True Concerning the Effect of an Increase in the Money

question 14

Multiple Choice

Which is true concerning the effect of an increase in the money supply compared to general equilibrium?

• A)Though it may increase GDP in the short run, its primary effect in general equilibrium is a higher price level.
• B)Though it may increase inflation in the short run, its primary effect in general equilibrium is higher GDP.
• C)Both GDP and the price level are likely to rise both in the short run and in general equilibrium.
• D)Neither GDP nor the price level is likely to be affected in the general equilibrium.

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