What is the impact on prices of expansionary monetary policy?
A) Prices are kept constant.
B) Prices fall uniformly.
C) Prices fall unevenly.
D) Prices rise uniformly.
E) Prices rise unevenly.

Question

Quizplus · Accepted Answer

Expansionary monetary policy leads to an increase in the money supply, which results in increased aggregate demand and puts upward pressure on prices. However, the impact on prices is not uniform and can vary depending on various factors such as the timing, magnitude, and effectiveness of the policy. Some prices may rise more than others, while some may remain constant or even fall. Therefore, the most likely impact of expansionary monetary policy on prices is unevenly rising prices.

What Is the Impact on Prices of Expansionary Monetary Policy