If There Is a Permanent Increase in the Domestic Money

question 61

Multiple Choice

If there is a permanent increase in the domestic money supply, then in the short run, which of the following will be true?

• A) The prices will adjust lower.
• B) Domestic interest rates will increase.
• C) Real money supply will increase.
• D) Domestic money demand will permanently increase.

---

Definitions:

Market Equilibrium

A condition in a market where supply equals demand, resulting in stable prices that neither increase nor decrease.

Competitive Industry

An economic environment where multiple businesses compete against one another, fostering innovation and efficiency to attract customers.

Market Demand

The aggregate amount of a product or service that every consumer in a market is prepared and capable of buying at different price levels.

Market Equilibrium

The state in which the quantity supplied equals the quantity demanded, causing market forces to be in balance.