According to the Aggregate Demand and Aggregate Supply Model, in the Long

question 66

Multiple Choice

According to the aggregate demand and aggregate supply model, in the long run what is the impact of an increase in the money supply?

• A) It lowers both the price level and real GDP.
• B) It increases GDP, but it does not change the price level.
• C) It increases the price level, but it does not change real GDP.
• D) It increases both the price level and real GDP.

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Definitions:

Rigidity

The quality of being unable to bend or be forced out of shape; lack of flexibility or adaptability.

Honesty in Fact

The genuine belief or actual state of mind devoid of intent to deceive or defraud.

Good Faith

An honest intention to act without taking an unfair advantage over another party, typically related to the fulfillment of contracts and agreements.

Opportunity for Inspection

A provision allowing a buyer to examine goods before purchase to ensure they meet the agreed standards and specifications.