In the long run, when the Fed increases the quantity of money, the
A)price level rises.
B)nominal interest rate falls.
C)real interest rate rises.
D)price level falls.
E)demand for money decreases.

Question

Quizplus · Accepted Answer

In the long run, an increase in the money supply by the Fed typically leads to a higher price level due to inflation, as more money chases the same amount of goods and services.

In the Long Run, When the Fed Increases the Quantity