Which of the following is most likely to happen in the short run?
A)The price level alone adjusts to balance the supply and demand for money.
B)Output responds to changes in the aggregate demand for goods and services.
C)Changes in the money supply cause a proportional change in the price level.
D)Changes in the money supply shift the aggregate supply curve, causing output to rise.

Question

Quizplus · Accepted Answer

In the short run, it is more likely that output will respond to changes in aggregate demand rather than the price level alone adjusting to balance supply and demand for money or changes in the money supply causing a proportional change in the price level. The option D is incorrect as changes in the money supply are unlikely to shift the aggregate supply curve, causing output to rise, in the short run.

Which of the Following Is Most Likely to Happen in the Short