Which of the following is true?
A)An unanticipated shift to a more expansionary monetary policy will temporarily stimulate output and employment.
B)Persistent growth of the money supply at a rapid rate will cause inflation.
C)Both a and b are true.
D)None of the above is true.

Question

Quizplus · Accepted Answer

An unanticipated shift to a more expansionary monetary policy (such as a decrease in interest rates or an increase in the money supply) will temporarily stimulate output and employment by increasing spending and investment. However, persistent growth of the money supply at a rapid rate can lead to excess demand for goods and services, which can cause inflation. Therefore, both option A and B are true.

Which of the Following Is True