In the Keynesian model,a decrease in the money supply would cause prices to ________ in the short run and ________ in the long run.
A)remain unchanged;remain unchanged.
B)remain unchanged;decrease
C)decrease;remain unchanged
D)decrease;decrease

Question

Quizplus · Accepted Answer

In the Keynesian model, prices are sticky in the short run, so a decrease in the money supply does not immediately affect prices. In the long run, however, prices can adjust, leading to a decrease.

In the Keynesian Model,a Decrease in the Money Supply Would