In the short-run velocity is not constant. Which of the following variables can be affected by a change in money supply?
I. real GDP
II. nominal GDP
III. the price level
A) III only
B) II and III
C) I, II, and III
D) If velocity is not constant, then none of the variables is affected.

Question

Quizplus · Accepted Answer

In the short-run, a change in money supply can affect real GDP, nominal GDP, and the price level because velocity is not constant, allowing for adjustments in these variables.

In the Short-Run Velocity Is Not Constant