In the short run, after a decrease in the money supply, employment _____, and the price level:

Question

Quizplus · Accepted Answer

In the short run, a decrease in the money supply typically leads to lower spending, which can reduce demand for goods and services. This reduction in demand can lead to both lower employment (as businesses cut back on production and therefore need fewer workers) and lower price levels (as businesses lower prices in an attempt to stimulate demand).

In the Short Run, After a Decrease in the Money