In Economies with Persistently High Inflation, an Increase in the Money

question 67

Multiple Choice

In economies with persistently high inflation, an increase in the money supply will have:

• A) a positive effect on the real quantity of money in the long run.
• B) a negative effect on the real quantity of money, as the aggregate price level increases by more than the money supply.
• C) a positive effect on the aggregate real output in the long run.
• D) no effect on the real quantity of money, making money neutral in the long run.