Let the Fed announce a 3.3 percent increase in the money supply after a period of economic stability at Y* = $5,000 and some price index
P = 100. Which of the following is a possible result, assuming a usual, Lucas-type supply curve?
A) GDP climbing to $5,167 with P = 100
B) GDP staying at $5,000 with P = 100
C) GDP staying at $5,000 with P climbing to 103.3
D) GDP climbing to $5,167 with P climbing as well to 103.3
E) none of the above
Correct Answer:
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