In the short run,an increase in the money supply tends to increase employment because:

Question

Quizplus · Accepted Answer

An increase in the money supply leads to lower interest rates and increased investment and consumption, which leads to an increase in aggregate demand. This increase in aggregate demand leads to an increase in production, leading firms to hire more workers to meet the increased demand. However, an increase in the money supply may lead to inflation in the long run, which can have negative effects on the economy.

In the Short Run,an Increase in the Money Supply Tends