In the money surprise model,an increase in the money supply causes

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According to the money surprise model, an increase in the money supply leads to a decrease in the real interest rate and the real wage, which stimulates output and employment. This is because the increase in the money supply causes an increase in demand, which leads to firms producing more goods and hiring more workers. This increased production and employment lead to an increase in output. However, the increase in demand also leads to an increase in prices, which lowers the real wage rate.

In the Money Surprise Model,an Increase in the Money Supply