Suppose the Central Bank Increases the Money Supply in an Economy

Multiple Choice

Suppose the central bank increases the money supply in an economy unexpectedly during a year.If the current inflation rate in this country is 3.4 percent, then according to new classical economists the expected inflation rate for the following year would be:

A) 3.4 percent.
B) less than 3.4 percent.
C) 2.4 percent, because people form their expectations adaptively.
D) around 6.8 percent.
E) greater than 3.4 percent.