If a Country Was Operating Well Below Its Long-Run Capacity

question 82

Multiple Choice

If a country was operating well below its long-run capacity (potential GDP) , the initial impact of an unanticipated increase in the money supply would most likely result in an increase in

• A) prices with little change in output.
• B) output with little change in prices.
• C) output and a decline in prices.
• D) prices and a decline in output.

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Definitions:

Suggested Retail Price

The retail price recommended by the manufacturer for the sale of a product to consumers.

Unit Retail Price

The price at which a single unit of a product is sold to consumers in the retail market.

Retail Price

The total cost at which a product or service is sold to the end consumer, inclusive of all markups.

US Dollar

The official currency of the United States, widely used as a standard of exchange in international markets.