If there is a permanent increase in the domestic money supply, then in the short run, which of the following will be true?
A) The prices will adjust lower.
B) Domestic interest rates will increase.
C) Real money supply will increase.
D) Domestic money demand will permanently increase.

Question

Quizplus · Accepted Answer

A permanent increase in the domestic money supply increases the real money supply in the short run, as prices are sticky and do not adjust immediately.

If There Is a Permanent Increase in the Domestic Money