If the money supply is fixed,increases in the price level reduce
A) interest rates.
B) imports.
C) the rate of inflation.
D) total real output purchased.
E) the average money cost of each transaction.

Question

Quizplus · Accepted Answer

If the money supply is fixed, then an increase in the price level reduces the purchasing power of each unit of currency. As a result, consumers can afford less, leading to a decrease in total real output purchased.

If the Money Supply Is Fixed,increases in the Price Level