Figure 10.1
-In Figure 10.1 if money demand increases faster than the money supply then:
A)the price level will rise over time.
B)the price level will fall over time.
C)GDP will rise over time.
D)GDP will fall over time.

Question

Figure 10.1 
-In Figure 10.1 if money demand increases faster than the money supply then:
A)the price level will rise over time. 
B)the price level will fall over time. 
C)GDP will rise over time. 
D)GDP will fall over time.

Quizplus · Accepted Answer

If money demand increases faster than the money supply, there will be a shortage of money, leading to a decrease in the price level over time as people hold onto money more tightly, reducing spending and causing deflationary pressure.

Figure 10.1 -In Figure 10.1 If Money Demand Increases Faster Than the Faster