In the long run,an increase in the stock of human capital
A)and increases in the money supply both make the price level rise.
B)and increases in the money supply both make the price level fall.
C)makes the price level rise,while increases in the money supply make prices fall.
D)makes the price level fall,while increases in the money supply make prices rise.

Question

Quizplus · Accepted Answer

An increase in the stock of human capital leads to improvements in productivity, which results in lower production costs and a decrease in the price level. On the other hand, an increase in the money supply leads to inflationary pressures and a rise in the price level. Therefore, the correct choice is D, which states that an increase in the stock of human capital makes the price level fall, while increases in the money supply make prices rise.

In the Long Run,an Increase in the Stock of Human