In an economy described by a Lucas supply curve and an aggregate demand curve that responds positively to real money balances M/P) , an anticipated increase in the money supply results in
A) an increase in output and the price level.
B) an increase in output but no increase in the price level.
C) no increase in output or the price level.
D) no increase in output and the price level.
E) a decrease in output and an increase in the price level.
Correct Answer:
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