If the Money Supply Increases by 10%, in the Long

question 68

Multiple Choice

If the money supply increases by 10%, in the long run:

• A) unemployment drops by 10%.
• B) the price level increases by 10%.
• C) real GDP increases by 10%.
• D) unemployment drops by 20%.

---

Definitions:

Beta

A measure of the volatility of a stock or portfolio compared to the volatility of the overall market.

Dividend Growth Model

A method of valuing a company's stock price by using predicted dividends and discounting them back to present value.

Cost of Equity

The return that investors expect for investing in a company's equity, often calculated using models like the Capital Asset Pricing Model (CAPM).

Market Risk Premium

Slope of the Security Market Line; the difference between the expected return on a market portfolio and the risk-free rate.