In the long run, an increase in the quantity of money, other things remaining the same,
A)decreases real GDP.
B)increases the price level.
C)increases real GDP.
D)decreases the price level.
E)has no effect on the price level or real GDP.

Question

Quizplus · Accepted Answer

In the long run, an increase in the quantity of money leads to higher price levels due to inflation, as per the quantity theory of money, while real GDP remains unaffected.

In the Long Run, an Increase in the Quantity of Money