Doubles the supply of gold coins in the economy

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Reference no: EM131115836

Suppose a country’s currency is a gold coin. One day, speculators find a large gold mine which doubles the supply of gold coins in the economy. In the short run:

A) both output and price levels will rise; in the long run the price level stays elevated, but output goes back to its long-run level.

B) Only price levels will rise in the long run the price level is unchanged, but output goes back to its long-run level.

C) Neither output nor price levels will rise; in the long run the price level falls, but output goes back to its long-run level.

D) Only output will rise, in the long run the price level is unchanged, but output goes back to its long-run level.

Reference no: EM131115836

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