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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

What do monetarists predict will happen in the short run and in the long run as a result of each of the following (in each case, assume that the economy is in long-run equilibrium)?

a. Velocity rises.

b. Velocity falls.

c. The money supply rises.

d. The money supply falls.

(a)

To determine

The change in long run and short run.

Explanation

When the velocity increases, it leads to an increase in the aggregate demand. This leads to a rightward shift of the aggregate demand curve. In the short run, the increase in th...

(b)

To determine

The change in long run and short run.

(c)

To determine

The change in long run and short run.

(d)

To determine

The change in long run and short run.

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