In the long run, an increase in the quantity of money ________ the value of money and ________ the price level.
A) raises; raises
B) raises; does not change
C) lowers; lowers
D) lowers; does not change
E) lowers; raises

Question

Quizplus · Accepted Answer

An increase in the quantity of money lowers the value of money as it leads to inflation, which raises the price level. Therefore, the correct answer is E: lowers; raises.

In the Long Run, an Increase in the Quantity of Money