The Short-Run Effect of an Increase in the Money Supply

question 16

Multiple Choice

The short-run effect of an increase in the money supply is to

• A) increase real GDP only.
• B) increase the price level only.
• C) increase both real GDP and the price level.
• D) increase nominal GDP but decrease the price level.

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Definitions:

Brittleness

A material property indicating how easily it breaks or cracks under stress without significant deformation.

Sulphur

A chemical element known for its yellow color and distinct smell, commonly used in fertilizers, industrial processes, and as a component of some fuels.

Produced Steel

Steel that has been manufactured and processed according to specified standards or requirements.

Thermosetting

The process of transforming a polymer into a more durable material through a curing process involving heat or chemical action.