In the Long Run, a Permanent Increase in the Nominal

question 8

Multiple Choice

In the long run, a permanent increase in the nominal money supply will

• A)lead to a permanently higher level of real output.
• B)lead to a permanently higher price level.
• C)lead to a permanently higher level of investment spending.
• D)have no effect on the level of output, the price level, or the level of investment spending.

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Definitions:

Redeem

The act of paying off or buying back securities or debts, typically at maturity or before, often for a specified price.

Initial Deposit

The first sum of money placed into an account, often marking the account's opening and establishing an initial balance.

Bond Sinking Fund

A financial strategy to set aside funds over time for the eventual repayment of the principal amount of bonds, ensuring the issuer can meet its future obligations.

Asset

An economic resource owned or controlled by a business or an individual that is expected to provide future benefits.