Changes in the availability of money have little impact on the macro performance of the economy.
Changes in the supply of money lead to changes in interest rates that influence aggregate demand and therefore output and the price level.

Question

Quizplus · Accepted Answer

Changes in the availability of money, specifically in its supply, have a significant impact on the macro performance of the economy. The increase or decrease in the supply of money by central banks can lead to changes in interest rates, which in turn influence investment and borrowing decisions by households and firms. These changes ultimately affect aggregate demand, output, and the price level, making money supply an important tool for macroeconomic policy.

Changes in the Availability of Money Have Little Impact on the Macro