An increase in the supply of money will lead to ____ in equilibrium real GDP and ____ in equilibrium price level.
A) an increase; an increase
B) an increase; a decrease
C) a decreases; an increase
D) a decrease; a decrease

Question

Quizplus · Accepted Answer

An increase in the supply of money will lead to an increase in aggregate demand, which will shift the AD curve outward leading to an increase in equilibrium real GDP. As a result of the increase in aggregate demand, there will be upward pressure on prices leading to an increase in the equilibrium price level.

An Increase in the Supply of Money Will Lead to ____