Suppose the Fed Permanently Increases the Money Supply by a Given

question 99

Multiple Choice

Suppose the Fed permanently increases the money supply by a given amount. Which of the following is most likely to occur in the long run as a result of this monetary policy action?

• A) an increase in employment
• B) a reduction in the real interest rate
• C) a decrease in unemployment
• D) none of the above

---

Definitions:

Interdependence

A relationship between two or more entities that rely on each other to their mutual benefit or detriment.

Low Self-Esteem

A condition characterized by a lack of confidence and feeling unworthy or incapable, often affecting an individual's behavior and mental health.

Gridlocked Conflict

A situation in which a conflict reaches a stalemate, with neither party willing to compromise or alter their position.

Bias

A preconceived opinion or preference for or against something or someone, which can influence judgment and behavior.