Question

The short-run effects of quantitative easing are expected to be a(n) ___________ in the price level with a long-run __________ in the real value of money. Choose one: A. increase, increase B. decrease, increase C. decrease, decrease D. increase, decrease

Answer 1

D. increase, decrease

Explanation:

Expansionary monetary policy methods, for example quantitative easing, fresh capital flowing into the economy. This tends to increase the price level gradually. The actual value of money declines as the demand increases

Therefore, from the above explanation, the correct answer is "D" as it increases the price level with a long-run decrease in the real value.