If the monetary authorities persistently expand the money supply at a rapid rate, the probable result will be:
A)inflation.
B)low nominal interest rates.
C)rapid growth of real GDP.
D)all of the above.

Question

If the monetary authorities persistently expand the money supply at a rapid rate, the probable result will be:​
A)​inflation.
B)​low nominal interest rates.
C)​rapid growth of real GDP.
D)​all of the above.

Quizplus · Accepted Answer

When the monetary authorities persistently expand the money supply at a rapid rate, the result is likely to be inflation. This is because when there is an excessive amount of money in circulation, the demand for goods and services increases, leading to an increase in their prices. This increase in prices is known as inflation. Low nominal interest rates and rapid growth of real GDP may also occur, but these are not guaranteed outcomes of monetary expansion.

If the Monetary Authorities Persistently Expand the Money Supply at a Rapid