The short-run effect of an increase in the money supply is to
A. increase nominal GDP but decrease the price level.
B. increase the price level only.
C. increase real GDP only.
D. increase both real GDP and the price level.
Answer: D
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In Figure 11.1, assume that QF is full-employment output and the level of aggregate spending is represented by AD1. If AD1 increases to AD2, which of the following statements is correct?
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