Although the Increase in Long-Run Aggregate Supply (Other Things Equal)

question 31

Multiple Choice

Although the increase in long-run aggregate supply (other things equal) , would expand real GDP and lower the price level, the declines in the price level has not been part of Canada's growth experience.This is because:

• A)the Bank of Canada has taken no action to change the nation's money supply.
• B)the Bank of Canada has increased the money supply much less than the increase in aggregate supply.
• C)the increase in the money supply by Bank of Canada has matched the increase in aggregate supply.
• D)the Bank of Canada usually engineers inflationary rightward shifts of the aggregate demand curve that are faster than the deflationary rightward shifts of the aggregate supply curve.