An increase in the quantity of money leads to
A)a decrease in net exports.
B)a decrease in real GDP.
C)an increase in aggregate demand.
D)an increase in short- run aggregate supply.
E)a decrease in the price level.

Question

Quizplus · Accepted Answer

An increase in the quantity of money leads to an increase in aggregate demand because people have more money to spend, which increases consumption and investment. This results in higher demand for goods and services, leading to an increase in output and prices.

An Increase in the Quantity of Money Leads to