Asked by Ethan Scofield on Jul 24, 2024
Verified
In the long run an increase in the money supply causes the price level to __________. The price level moves in this direction because an increase in the money supply creates __________ in the money market that causes people to ________ spending.
Money Supply
The full scope of monetary resources present in an economy at a certain period.
Price Level
The average of current prices across the entire spectrum of goods and services produced in the economy, indicating the cost of living or inflation rate.
Money Market
A segment of the financial market where short-term financial assets with high liquidity are traded.
- Attain an understanding of how changes in money supply affect price levels and the worth of money.
- Clarify the concept of the quantity theory of money and its interrelation with inflation.
Verified Answer
RD
Learning Objectives
- Attain an understanding of how changes in money supply affect price levels and the worth of money.
- Clarify the concept of the quantity theory of money and its interrelation with inflation.