Most policy makers agree that in the long run,changes in the money supply influence:
A)the price level and inflation.
B)the real interest rate and aggregate demand.
C)the planned investment expenditure.
D)the exchange rate.
E)the potential GDP and unemployment.

Question

Quizplus · Accepted Answer

Changes in the money supply have a long-run impact on the price level and inflation. This relationship is known as the quantity theory of money. As the money supply increases, prices will eventually rise due to the increase in demand for goods and services. Conversely, a decrease in the money supply will cause prices to fall. This relationship is important for policy makers to consider when implementing monetary policy.

Most Policy Makers Agree That in the Long Run,changes in the Money