Answer :
When the money supply rises by 10%, in the long run, output is unchanged , and the price level rises .As money supply increase in the short run the price level and output both increase. But in the long run the output remain same and price go rises.
All the money and other liquid assets present in an economy on the measurement date are referred to as the money supply. The money supply roughly consists of deposits that can be utilized virtually as easily as cash in addition to actual currency.
Governments issue coin and paper money through a mix of national treasuries and central banks. By dictating to banks what reserves they must maintain, how to offer credit, and other financial issues, bank regulators have an impact on the amount of money that is available to the general people.
The amount of money circulating in an economy is referred to as the "money supply." Numerous money supply measurements also factor in non-cash assets like credit and loans.
Increases in the money supply, according to monetarists, always result in inflation.
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