A Change in the Level of the Supply of Money

question 39

Multiple Choice

A change in the level of the supply of money

• A) increases the long-run values of the interest rate and real output.
• B) decreases the long-run values of the interest rate and real output.
• C) has no effect on the long-run values of the interest rate, but may affect real output.
• D) has no effect on the long-run values of real output, but may affect the interest rate.
• E) has no effect on the long-run values of the interest rate and real output.

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Definitions:

Consumer's Surplus

The difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually pay.

Demand Function

The demand function is a mathematical representation that describes the quantity of a good that consumers are willing and able to purchase at various prices.

Mead

A drink made by the fermentation of honey and water, often enhanced with the addition of fruits, spices, grains, or hops to create an alcoholic beverage.

Price

The financial expenditure expected, essential, or relinquished in payment for something.