If the Fed increases $\vec { M }$ to fight slower real growth after a negative real shock, which of the following should occur?
A) no change in real growth
B) lower real growth
C) lower inflation
D) higher inflation

Question

Quizplus · Accepted Answer

Increasing the money supply ($\vec { M }$) typically leads to higher inflation, especially when done to counteract slower real growth after a negative real shock.

If the Fed Increases M⃗\vec { M }M To Fight Slower Real Growth After a Negative Real Shock

If the Fed Increases $\vec { M }$ To Fight Slower Real Growth After a Negative Real Shock