Question

A long-run effect of increasing the money supply can be inflation.

Answer 1

Answer:

The given statement is true

Explanation:

When the supply of money rises, the aggregate demand also increases for the products. It, therefore promotes variance in prices to the positive side over a long period that later leads to output increase.

To determine the link that exists between money and the supplies is through simplification of the output, which does not change. The assumption, therefore, is essential in isolating money impact specifically on prices. However, this can be adjusted subsequently in fixing the output.