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

Question

Quizplus · Accepted Answer

An increase in the quantity of money typically leads to higher price levels (inflation) and can stimulate economic activity, resulting in an increase in real GDP in the short run.

Suppose the Quantity of Money Is Expected to Remain Unchanged