In the figure above, in the long run what happens if the Fed increases the quantity of money by 5 percent?
A)The real interest rate falls and the LRMD curve shifts rightward.
B)The nominal interest rate rises by 5 percent.
C)The price level rises by 5 percent and the LRMD shifts leftward.
D)The value of money rises by 5 percent.
E)The value of money falls by 5 percent and there will be a movement down along the LRMD curve.

Question

In the figure above, in the long run what happens if the Fed increases the quantity of money by 5 percent?
A)The real interest rate falls and the LRMD curve shifts rightward. 
B)The nominal interest rate rises by 5 percent. 
C)The price level rises by 5 percent and the LRMD shifts leftward. 
D)The value of money rises by 5 percent. 
E)The value of money falls by 5 percent and there will be a movement down along the LRMD curve.

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The Answer of

In the figure above, in the long run what happens if the Fed increases the quantity of money by 5 percent?
A)The real interest rate falls and the LRMD curve shifts rightward. 
B)The nominal interest rate rises by 5 percent. 
C)The price level rises by 5 percent and the LRMD shifts leftward. 
D)The value of money rises by 5 percent. 
E)The value of money falls by 5 percent and there will be a movement down along the LRMD curve.

In the Figure Above, in the Long Run What Happens