Changes in the Quantity of Money Lead to Real Changes

question 62

Multiple Choice

Changes in the quantity of money lead to real changes in the economy.If this is the case,why would the central bank ever stop increasing the money supply?

• A) Although there is a short-run incentive to increase the money supply,these effects wear off in the long run as prices adjust and then drive up the value of money.
• B) The government has rules in place on the maximum amount the money supply can be increased in a given fiscal year.
• C) Although there is a short-run incentive to increase the money supply,these effects wear off in the long run as prices adjust and then drive down the value of money.
• D) Increasing the money supply is not a politically popular action and may lead to leaders of the central bank not getting reelected.
• E) The short-run benefits are outweighed by the short-run costs of increases in the money supply.

---

Definitions:

Consciousness

The state of being aware of and able to think about one's own existence, sensations, thoughts, surroundings, and experiences.

Labeling Theory

A sociological theory suggesting that deviance and conformity result not so much from what people do, but from how others respond to those actions.

Social Interaction

Social interaction is the process by which individuals act and react in relation to others, shaping their behavior through mutual exchange and influence.

Impute Meanings

The act of assigning or attributing significance, interpretation, or value to something based on personal perceptions or cultural norms.