If the demand for money increases, but the Bank of Canada keeps the money supply the same, then in the short run output will:
A)fall, and in the long run prices will remain unchanged.
B)remain unchanged, and in the long run prices will fall.
C)remain unchanged, and in the long run prices will remain unchanged.
D)fall, and in the long run prices will fall.

Question

Quizplus · Accepted Answer

In the short run, an increase in money demand with a constant money supply leads to higher interest rates, reducing investment and output. In the long run, lower output can lead to lower prices.

If the Demand for Money Increases, but the Bank of Canada