In the short run,if the Federal Reserve responds to a negative real shock with an increase in money supply growth,output growth will increase because of:
A) the real shock only.
B) the increase in money growth only.
C) both the real shock and the increase in money growth.
D) some reason other than the real shock and the increase in money growth.

Question

Quizplus · Accepted Answer

The increase in money supply growth by the Federal Reserve can stimulate economic activity and increase output growth in the short run, independent of the real shock.

In the Short Run,if the Federal Reserve Responds to a Negative