In the Long Run, an Increase in the Quantity of Money

question 32

Multiple Choice

In the long run, an increase in the quantity of money, other things remaining the same,

• A)decreases real GDP.
• B)increases the price level.
• C)increases real GDP.
• D)decreases the price level.
• E)has no effect on the price level or real GDP.

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Definitions:

Expenditures

The total amount spent on goods and services, including both personal consumption and investment by businesses.

Income

Income is the money received, especially on a regular basis, for work or through investments.

Real GDP

A macroeconomic measure of the value of economic output adjusted for price changes (inflation or deflation), giving a more accurate depiction of an economy's size and growth rate.

Recessions

Periods of economic decline when real GDP falls for two consecutive quarters, indicating a significant reduction in economic activity across the economy.