The supply of real money balances increases when

Question

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The supply of real money balances increases when the overall price level falls because the real value of a given quantity of money is higher when prices are lower. This means that the purchasing power of money increases, allowing individuals to buy more goods and services with the same amount of nominal money. Choices A, B, and C are actions that would typically decrease the supply of money or have no direct effect on the real money balances in terms of changing the price level.

The Supply of Real Money Balances Increases When