In the long run, an increase in the money supply will

Question

Quizplus · Accepted Answer

In the long run, an increase in the money supply will lead to a corresponding increase in the aggregate demand, which will cause an upward pressure on the price level. This is because the increased money supply will make it easier for consumers to spend and will increase the demand for goods and services. As a result, businesses will raise their prices to keep up with the demand, leading to an increase in the price level. Therefore, choice C, "increase the price level," is the correct answer.

In the Long Run, an Increase in the Money Supply