Starting from a Position of Macroeconomic Equilibrium at the Full-Employment

question 170

Multiple Choice

Starting from a position of macroeconomic equilibrium at the full-employment level of real GDP, in the short run an unanticipated increase in the money supply will

• A) raise real interest rates, lower prices, and reduce real GDP.
• B) raise real interest rates, lower prices, and leave real GDP unchanged.
• C) raise nominal interest rates, lower prices, and leave real GDP unchanged.
• D) lower real interest rates, raise prices, and increase real GDP.