According to aggregate demand and supply analysis and with everything else held constant,a continuous increase in the money supply causes
A)the price level to increase,but has no lasting effect on the inflation rate.
B)the price level to fall.
C)inflation.
D)output to increase,but leaves the price level and inflation unchanged.

Question

Quizplus · Accepted Answer

According to aggregate demand and supply analysis, a continuous increase in the money supply will cause inflation as the demand for goods and services rises due to increased purchasing power. As demand rises, firms increase prices creating price pressure leading to inflation. Therefore, the correct choice is C- inflation.

According to Aggregate Demand and Supply Analysis and with Everything