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28 January, 09:01

Suppose the economy is in long-run equilibrium at the level of potential output. What will be the long-run effect of an expansionary monetary policy?

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  1. 28 January, 11:16
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    Higher prices.

    Explanation:

    Expansionary monetary policy seeks to grow the economy by increasing the money supply, lowering interest rates, and stimulating demand. As we know from the supply/demand curves, higher demand leads to higher price levels.
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