All else being equal, a one-time increase in the money supply leads to
A)inflation.
B)a one-time increase in the price level.
C)a one-time shift to the left in the AD curve.
D)a permanent shift to the right in the SRAS curve.

Question

Quizplus · Accepted Answer

According to the quantity theory of money, a one-time increase in the money supply leads to a proportional increase in the price level in the long run. This means that all else being equal, the price level will increase one time as a result of the increase in the money supply.

All Else Being Equal, a One-Time Increase in the Money