In the Keynesian model in the long run,an increase in the money supply will
A)raise the price level but not the level of output.
B)raise the level of output but not the price level.
C)raise both the level of output and the price level.
D)raise neither the level of output nor the price level.

Question

Quizplus · Accepted Answer

In the Keynesian model in the long run, an increase in the money supply will only result in an increase in the price level and not the level of output. This is because in the long run, prices adjust to equilibrium levels, and the increase in the money supply will lead to an increase in the demand for goods and services, causing prices to rise. However, in the long run, the level of output is determined by factors such as technology, capital, and labor, and is not affected by changes in the money supply.

In the Keynesian Model in the Long Run,an Increase in the Money