What is the impact on prices of expansionary monetary policy? 1)Prices rise unevenly. 2)Prices fall unevenly....
What is the impact on prices of expansionary monetary policy?
1)Prices rise unevenly.
2)Prices fall unevenly.
3)Prices fall uniformly.
4)Prices are kept constant.
5)Prices rise uniformly.
Homework Answers
Correct option is (5).
An expansionary monetary policy increases money supply and decreases interest rate, which increases investment & consumption, thereby increasing aggregate demand. Higher aggregate demand shifts the AD curve rightward, which increases the aggregated (general) price level in the economy as a whole. In absence of specific data, prices are said to rise uniformly.
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What is the impact on prices of expansionary monetary
policy?
1)Prices rise unevenly.
2)Prices fall unevenly....
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