|Author||Topic: Keynesian nonsense|
|A practice question:
In the short run, will an increase in money supply increase the price level and real output?
a. both will increase
b. neither will increase
c. only one will increase
They say A. This is nonsense. If I print money, and prices rise. My real consumption is the same. This is complete garbage.
|Why do you think this is garbage? It?s not your consumption that is the issue. It?s that in the short run you get M*V = P*Q son increasing M increases P and/or Q. At least in normal times. Right now, it just drops V some more.|