An unexpected increase in money growth increases inflation but not real growth in the long run.

Question

Quizplus · Accepted Answer

An unexpected increase in money growth may lead to increased spending and demand for goods and services in the short run, leading to higher prices and inflation. However, in the long run, this increase in money growth does not affect the economy's potential to produce goods and services (real growth) and only results in sustained inflation.

An Unexpected Increase in Money Growth Increases Inflation but Not