The "inflation parable" in the text refers to the fact that an unexpected change in the money supply affects:
A) real GDP only in the long run.
B) real GDP only in the short run.
C) real GDP in both the short run and the long run.
D) only inflation in the short run.

Question

Quizplus · Accepted Answer

The "inflation parable" typically illustrates how an unexpected increase in the money supply can lead to short-term changes in real GDP due to price and wage stickiness, but in the long run, it primarily affects inflation rates without impacting real GDP.

The "Inflation Parable" in the Text Refers to the Fact