If the money supply is not changed in response, which result will occur in the short...
If the money supply is not changed in response, which result will occur in the short run?
a. Unemployment will fall, real GDP will rise, and prices will rise.
b. Prices will be unchanged, nominal GDP will be unchanged, and real GDP will rise.
c. Real GDP, nominal GDP, and unemployment will all remain unchanged.
d. Real GDP will be unchanged, nominal GDP will rise, and prices will rise.
e. Unemployment will rise, prices will rise, and real GDP will remain unchanged.
Homework Answers
If the money supply is not changed in response, Unemployment will rise, prices will rise, and real GDP will remain unchanged. in the shortrun. this might happen because if in the economy demand for a good increases it will automatically increase its price level as in the shortrun its difficult to change the production. this as a result will increase the demand for money and the rate of interest will rise, which will reduce investment and will increase unemployment but the output in the economy will not change in the shortrun so real GDP will remain unchanged.
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