In the long run, the primary effect of rapid monetary growth is
A) lower nominal interest rates.
B) reduced unemployment.
C) inflation.
D) an increase in real output.

Question

Quizplus · Accepted Answer

Rapid monetary growth leads to an increase in the supply of money and credit, which can ultimately cause inflation as it creates more demand for goods and services than the economy can supply. This excess demand leads to an increase in prices, reducing the purchasing power of money.

In the Long Run, the Primary Effect of Rapid Monetary