In an economy with money,changing its quantity
A) can stimulate long-run economic growth.
B) affects quantities, but not prices.
C) does not change real quantities.
D) improves welfare for the poor more than the rich.
E) changes real quantities in the long-run.

Question

Quizplus · Accepted Answer

In the long run, changes in the money supply do not affect real quantities like output or employment, as these are determined by real factors. Instead, they affect nominal variables like prices, leading to inflation or deflation.

In an Economy with Money,changing Its Quantity