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.

Economics

You might also like to view...

The aggregate production function of Ritland is Y = A × K0.3 × H0.7. The total output produced in Ritland in a certain year was worth $135,000

The technology used in the country improved over the next 10 years while the capital stock and the efficiency units of labor remained approximately the same. Which of the following is likely to be true in this case? A) The Human Development Index of the country is likely to improve. B) The gross domestic product of the country is likely to increase. C) The gross domestic product of the country is likely to decrease. D) The inflation rate in the country is likely to reduce.

Economics

Suggest two policies the government could pursue to help increase the accumulation of knowledge

What will be an ideal response?

Economics

A look at the historical data indicates that velocity for M1

A. has been more variable than the velocity for M2, but both have been fairly constant for the past 65 years. B. and M2 have both trended downward, but velocity for M2 has been more erratic than velocity for M1. C. has been fairly constant for the past 65 years, but velocity for M2 has trended downward. D. has trended upward in the past 65 years, but velocity for M2 has been more constant.

Economics

The demand and supply curves in the market for gasoline are illustrated in the graph below.Starting at the equilibrium point, if the government imposes a price ceiling of $10, the deadweight loss will be the area ________.

A. F + G B. D C. E D. D + E

Economics