Expansionary monetary policy can have immediate real short-run effects; initially,no prices have adjusted.But as prices adjust in the long run,the real impact of monetary policy
A) is multiplied.
B) is negative.
C) is cut in half.
D) dissipates completely.
E) is unknown.

Question

Quizplus · Accepted Answer

In the long run, prices will fully adjust to the expansionary monetary policy, meaning that the initial real short-run effects will dissipate completely. Therefore, the correct answer is D, as the real impact of monetary policy will no longer be present in the long run.

Expansionary Monetary Policy Can Have Immediate Real Short-Run Effects; Initially,no