What is likely to happen if a central bank suddenly prints a large amount of new money?
What will be an ideal response?
Whereas there are theories that predict that changes in the supply of money have real effects on the economy in the short run, it is likely that if the central bank showers the economy suddenly with money, the only result will be higher inflation. This is because the demand for money ultimately depends on the amount of real transactions in the economy and how much money is needed to facilitate these transactions. Additional supply of money is unlikely to make people consume more or work harder.
You might also like to view...
Which of the following in NOT direct response advertising?
a. A classified ad b. An infomercial on a television shopping network c. A billboard with your business's phone number d. A magazine ad that directs users to your Website
Which of the following is anything that interferes with, distorts, or slows the transmission of information?
a. feedback b. nonpaid communication c. noise d. static