Explain the long-run consequences of continued increases in the money supply
What will be an ideal response?
Continued increases in the money supply will shift aggregate demand rightward, eventually the continued increases in aggregate demand will move up the vertical portion of the long-run aggregate supply curve. This will result in no real effects on output, only increases in the price level.
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Increases in the price level will
A) raise consumption because some goods and services are more affordable. B) raise consumption because real wealth increases. C) lower consumption because real wealth decreases. D) lower consumption because goods and services are less affordable.
A consumer or producer who does not pay for use of a nonexclusive good but expects others to pay is known as a:
A) free rider. B) price setter. C) fringe element. D) none of the above