In the long run, when the Reserve Bank increases the quantity of money, the
A) price level falls.
B) real interest rate rises.
C) nominal interest rate falls.
D) demand for money decreases.
E) price level rises.

Question

Quizplus · Accepted Answer

When the Reserve Bank increases the quantity of money, it typically leads to inflation, which means the price level rises. This is because more money in the economy tends to decrease its value, leading to higher prices for goods and services.

In the Long Run, When the Reserve Bank Increases the Quantity