The economy's output always expands when the money supply increases.

Question

Quizplus · Accepted Answer

An increase in the money supply can lead to economic expansion by lowering interest rates and encouraging borrowing and investment. However, if the economy is at or near full capacity, further increases in the money supply may lead primarily to inflation without a corresponding increase in real output. Additionally, other factors like consumer confidence, fiscal policy, and external economic conditions also play significant roles in determining the economy's output.

The Economy's Output Always Expands When the Money Supply Increases