In the long run, an increase in the money supply will lead toResponsesA  a decrease in velocity. a decrease in velocity.B an increase in velocity.an increase in velocity.C a decrease in real GDP.a decrease in real GDP.D an increase in real GDP.

If the money supply increases, while prices and velocity remain constant, real GDP will:

There has been a decrease in investment. As a result, real GDP will ________ in the short run, and ________ in the long run.Question 6Answera.decrease; increase to its initial levelb.increase; increases furtherc.decrease; decrease furtherd.increase; decrease to its initial value

If real GDP​ decreases: a. there will be a downward movement along the money demand curve. b. the money demand curve will shift to the left. c. there will be an upward movement along the money demand curve. d. the money demand curve will shift to the right.

If there is an increase in the nation’s money supply, the interest rate willmultiple choicerise, investment spending will fall, aggregate demand will shift right, real GDP will fall, and the price level will rise.fall, investment spending will rise, aggregate demand will shift right, and real GDP and the price level will rise.fall, investment spending will rise, aggregate demand will shift right, real GDP will rise, and the price level will fall.rise, investment spending will fall, aggregate demand will shift right, real GDP will rise, and the price level will fall.

Key ideas→ In the long run, an increase in the quantityof money leads to an equal percentageincrease in the price level→ Nominal GDP = PY→ V = PY/M→ P = M(V/Y)→ (Inflation rate) = (Money growth rate) +(Growth rate of velocity) − (Real GDPgrowth rate)