Why doesn't GDP change in the long run when the money supply changes?
A. Because in the long run, GDP is determined by the fundamental factors of growth, not the money supply.
B. Because the money supply changes only in the short run and then returns to its long-run level.
C. Because in the long run, GDP is determined by fiscal policy and not by monetary policy.
D. Because in the long run, households adjust their savings to counteract any change in the money supply.
Ans: A. Because in the long run, GDP is determined by the fundamental factors of growth, not the money supply.
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What will be an ideal response?
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The demand and supply curves in the market for gasoline are illustrated in the graph below.
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A. F + G B. D C. E D. D + E