In the short run,an increase in the money supply will
A) decrease the interest rate,increase real GDP,and decrease the price level
B) increase the interest rate,decrease real GDP,and decrease the price level
C) result in decreases in the interest rate and real GDP,which are then followed by increases in the interest rate which offset some of the change in real GDP
D) result in decreases in the interest rate and increases in real GDP,which are then followed by increases in the interest rate which offset some of the increase in real GDP
E) result in an increase in the interest rate and a decrease in real GDP,which are then followed by decreases in the interest rate which offset some of the decrease in real GDP

Question

Quizplus · Accepted Answer

In the short run, an increase in the money supply typically lowers interest rates, which stimulates investment and consumption, leading to an increase in real GDP. Over time, as the economy adjusts, interest rates may rise again, partially offsetting the initial increase in real GDP.

In the Short Run,an Increase in the Money Supply Will