Suppose there is full employment and vertical aggregate supply schedule. An increase in the nominal money supply
A. reduces the rate of interest and changes the composition of output
B. causes a proportional increase in real output
C. has no effect on the real money supply or the composition of output
D. causes the real money supply to increase, which changes composition of output
Answer:C
Suppose there is full employment and vertical aggregate supply schedule. An increase in the nominal money supply
A. reduces the rate of interest and changes the composition of output B. causes a proportional increase in real output C. has no effect on the real money supply or the composition of output D. causes the real money supply to increase, which changes composition of output