In the long run, money demand and money supply determine

a. the price level and the real interest rate.
b. the price level but not the real interest rate.
c. the real interest rate but not the price level.
d. neither the price level nor the real interest rate.

answer

watching

104

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Chika IlonahLv10

17 Oct 2020

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

For the U.S. economy, which of the following helps explain the slope of the aggregate demand curve?

a. An increase in the price level decreases the interest rate.
b. An increase in the price level increases the interest rate.
c. An increase in the money supply decreases the interest rate.
d. An increase in the money supply increases the interest rate.

coralalpaca225

The principle of monetary neutrality implies that an increase in the money supply will

A. increase real GDP and the price level.

B. increase the price level, but not real GDP.

C. increases real GDP, but not the price level.

D. increases neither the price level nor real GDP.

fuchsiahound634

The Federal Reserve expands the money supply by 5 percent:

a. Use the theory of liquidity preference to illustrate in a graph the impact of this policy on the interest rate.
b. Use the model of aggregate demand and aggregate supply to illustrate the impact of this change
in the interest rate on output and the price level in the short run.
c. When the economy makes the transition from its short-run equilibrium to its new long-run equilibrium, what will happen to the price level?
d. How will this change in the price level affect the demand for money and the equilibrium interest rate?
e. Is this analysis consistent with the proposition that money has real effects in the short run but is neutral in the long run?