Other things equal, the level of real GDP will tend to increase in the short run:

Question

Quizplus · Accepted Answer

A reduction in the discount rate makes borrowing easier and cheaper for banks, increasing the supply of money and credit in the economy. This leads to increased investment, consumption, and production, ultimately leading to an increase in real GDP in the short run. The other options lead to a decrease in the money supply and higher interest rates, which can lead to a decrease in investment, consumption, and production, leading to a decrease in real GDP.

Other Things Equal, the Level of Real GDP Will Tend