In the long run, an increase in the rate of growth in the money stock
A) increases the rate of inflation in the economy.
B) increases the level of GDP in the economy.
C) increases the amount of investment in the economy.
D) reduces net exports in the economy.
E) none of the above.

Question

Quizplus · Accepted Answer

An increase in the rate of growth in the money stock typically leads to higher inflation in the long run, as more money chases the same amount of goods and services, leading to price increases. The other options are not direct long-term consequences of an increased money stock growth rate.

In the Long Run, an Increase in the Rate of Growth