Question

Most economists believe that an increase in the quantity of money results in

Answer 1

Answer: D). All of the above

Step-by-step explanation:

Increase in the quantity of money leads to an increase in the demand for goods and services, shifting the aggregate demand curve to the right in the short-run. This increases output and employment in the short-run which lead to lower unemployment in the short run. However, this level of output is not stable with the full employment level of output. Thus, measures must be taken to bring it back to the full employment level. Wages will drive up shifting the aggregate supply curve to the left. This, will lead to higher price or higher inflation in the long run.

Thus, D). All of the above is the correct option.

Answer 2

Most economists believe that an increase in the quantity of money results in;

1) an increase in the demand for goods and services.
2) lower unemployment in the short run.
3) higher inflation in the long run.

A economist is a person who is a social researcher dedicated to the investigation of the connection between human conduct and free market activity or supply and demand. Expanding the cash supply quicker than the development in real yield will cause inflation. The reason is that there is more cash pursuing a similar number of merchandise. In this way, the expansion in financial demand makes firms set up costs. And if the cash supply increments at an indistinguishable rate from actual yield, at that point costs will remain the same.