In the long run, a decrease in the money supply will decrease real Gross Domestic Product (GDP). decrease the price level. increase real Gross Domestic Product (GDP). increase the price level.

1 answer
Question:

In the long run, a decrease in the money supply will
decrease real Gross Domestic Product (GDP).
decrease the price level.
increase real Gross Domestic Product (GDP).
increase the price level.

Answers

Answer:decrease real Gross Domestic Product (GDP).Explanation:GDP represents the total value of a country output. The calculation of GDP using the expensive method is identical to that of the aggregate demand. Aggregate demand is the total of government spending, consumer spending, investment, and net exports. Therefore, GDP and aggregate demand are the same. A decrease in the money supply leads to firms and households having less money to spend. Reduction in disposable income results in reduced consumer spending, which has adverse effects on aggregate demand. Therefore, reduced money supply results in a decline in consumer spending and reduced aggregate demand, leading to a reduction in a country's output.

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