In the View of the New Classical Economists, an Increase

question 82

Multiple Choice

In the view of the new classical economists, an increase in the money supply will affect aggregate output and employment ________.

• A) only if the increase in money supply is anticipated
• B) only if the increase in money supply is expected
• C) only if the increase in money supply is unanticipated
• D) only if the increase in money supply is the result of an announced open market operation

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Definitions:

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

Dollar Depreciation

A decrease in the value of the dollar relative to other currencies, making imports more expensive and exports cheaper.

Real GDP

The measure of a country's economic output adjusted for price changes, reflecting the true value of goods and services produced.

Money Supply

The combined amount of money available in an economy at a given period.