The Most Likely Short-Run Impact of an Unanticipated Increase in the Money

question 75

Multiple Choice

The most likely short-run impact of an unanticipated increase in the money supply is a(n) :

• A)increase in the real interest rate, which in turn stimulates investment and GDP.
• B)decrease in the real interest rate, which in turn stimulates investment and GDP.
• C)decrease in real output, which causes the real interest rate to decline stimulating investment and GDP
• D)increase in real output, which causes the real interest rate to decline.
• E)increase in cost of borrowing finds from the banks, leading to a decrease in the level of investment.

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