Suppose the quantity of money is expected to remain unchanged but it actually increases.The price level
A)rises and real GDP stays the same.
B)falls and real GDP increases.
C)rises and real GDP increases.
D)rises and real GDP decreases.
E)falls and real GDP decreases.

Question

Quizplus · Accepted Answer

When the quantity of money increases unexpectedly, it typically leads to an increase in spending and demand, which can push prices up (inflation). This increased demand can also lead to an increase in real GDP as businesses produce more to meet the higher demand.

Suppose the Quantity of Money Is Expected to Remain Unchanged