When the supply of money increases, then
A)the price level rises.
B)the price level falls.
C)money demand increases.
D)money demand decreases.

Question

Quizplus · Accepted Answer

When the supply of money increases, there is more money available in the economy, which leads to an increase in demand for goods and services. As the demand for goods and services rises, producers increase their prices, resulting in a rise in the price level. This is known as inflation.

When the Supply of Money Increases, Then