According to AD-AS model,the primary long-run effect of increases in the money supply is
A) a higher price level.
B) higher GDP.
C) a lower price level.
D) lower GDP.

Question

Quizplus · Accepted Answer

According to the AD-AS model, an increase in the money supply shifts the AD curve to the right, leading to higher output and a higher price level in the long-run. This is because the increase in the money supply leads to an increase in spending, which causes firms to increase production and prices to rise due to increased demand. Therefore, the primary long-run effect of increases in the money supply is a higher price level.

According to AD-AS Model,the Primary Long-Run Effect of Increases in the Money