Expanding the money supply can potentially be inflationary or non-inflationary depending on various factors. However, among the options provided, the scenario where expanding the money supply is non-inflationary is described by:
a) Supply of goods increases as the money supply remains constant.
When the supply of goods increases while the money supply remains constant, there is a greater availability of goods relative to the amount of money in circulation. This increased supply of goods can lead to stable or even falling prices, rather than inflation. Essentially, the increased production or availability of goods balances out the increased money supply, preventing a significant rise in prices.
It's important to note that in the real world, the relationship between money supply and inflation is complex, and multiple factors come into play, including the velocity of money, economic growth, consumer expectations, and government policies. Therefore, it's not a straightforward correlation, and the impact of changes in the money supply on inflation can vary in different economic circumstances.