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In the long run, an increase in the quantity of money ________ the value of money...

In the long run, an increase in the quantity of money ________ the value of money and ________ the price level.

raises; raises

lowers; lowers

does not change; raises

lowers; raises

raises; lowers
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Answer #1

Fourth option is correct

According to the money neutrality theory, in the long run increase in the money supply causes a proportionate increase in the price level so that there is no real effect of money supply on output and employment. in this case also when there is an increase in the quantity of money in the long run, the value of money will decline because the price level will increase.

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