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The Most Likely Short-Run Impact of an Unanticipated Increase in the Money

Question 48

Multiple Choice

The most likely short-run impact of an unanticipated increase in the money supply is a(n) :


A) increase in the real interest rate, which in turn stimulates investment and GDP.
B) decrease in the real interest rate, which in turn stimulates investment and GDP.
C) decrease in real output, which causes the real interest rate to decline stimulating investment and GDP
D) increase in real output, which causes the real interest rate to decline.
E) increase in cost of borrowing finds from the banks, leading to a decrease in the level of investment.

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