Suppose that neither output nor the money supply has been growing. In the new classical view, if the Chairman of the Fed announces a 10% increase in the money supply and then takes actions that cause the money supply to grow by only 5%, the result will be that
A)the price level will increase, but output will decrease.
B)output will increase, but the price level will not.
C)neither output nor the price level will increase.
D)both the price level and output will increase.

Question

Quizplus · Accepted Answer

The Answer of Suppose that neither output nor the money supply has been growing. In the new classical view, if the Chairman of the Fed announces a 10% increase in the money supply and then takes actions that cause the money supply to grow by only 5%, the result will be that
A)the price level will increase, but output will decrease.
B)output will increase, but the price level will not.
C)neither output nor the price level will increase.
D)both the price level and output will increase.

Suppose That Neither Output nor the Money Supply Has Been