What Is the Effect of Increases in the Capital Stock

question 172

Multiple Choice

What is the effect of increases in the capital stock and in the money supply on prices in the long run?

• A) Both make the price level rise.
• B) Both make the price level fall.
• C) Increases in the capital stock make the price level rise, while increases in the money supply make prices fall.
• D) Increases in the capital stock make the price level fall, while increases in the money supply make prices rise.

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