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Economics (AS & A Level) · Oct / Nov 2022 · Paper 32 · Question 23

9708Money and banking

According to Keynesian theory, when will an increase in the money supply leave the level of output unchanged?

  1. Awhen there is a liquidity trap
  2. Bwhen the money supply increase was not anticipated
  3. Cwhen there is a floating exchange rate
  4. Dwhen there is an immediate adjustment to expectations about future price levels

As printed in the paper

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Correct answer: A. when there is a liquidity trap

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