All Else Constant, an Increase in the Supply of Money

question 175

Multiple Choice

All else constant, an increase in the supply of money will lead to _______

• A) an increase in the equilibrium quantity of money and an increase in the equilibrium price of bonds.
• B) an increase in the equilibrium quantity of money and a decrease in the equilibrium price of bonds.
• C) a decrease in the equilibrium quantity of money and an increase in the equilibrium price of bonds.
• D) a decrease in the equilibrium quantity of money and a decrease in the equilibrium price of bonds.

---

Definitions:

Taxes

Mandatory financial charges or levies imposed by a government on individuals, corporations, and other entities to fund public expenditures.

Inflationary

Pertaining to inflation, describing a situation or trend where prices for goods and services rise over time, diminishing purchasing power.

Government Expenditures

The total amount of money spent by the government in a given period, including spending on goods and services, transfer payments, and interest on debt.

Federal Reserve

The central banking system of the United States, responsible for conducting the nation's monetary policy and regulating its financial institutions.