An increase in supply of money will lead to...........in equil.real gdp and ...........in equil price level?

Question

An increase in supply of money will lead to...............in equil.real gdp and ........................in equilibrium price level.

a) increase,increase

b)increase,decrease

c)decrease,increase

d)decrease,decrease

Answer 1

i think the answer is b because as money supply increases the gdp increases and the prices falls.

Answer 2

a) increase,increase

Real GDP in short-run will increase due to stimulating effect of expansionary monetary policy

But it will lead to inflation thus increasing price-level.