Show how an announcement by the Fed that the money supply will be increased in the future, will lead to an increase in the price level today.
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Expert's answer
2012-04-10T08:00:54-0400
First step: Announcement by the Fed that the money supply will be increased in the future will cause expectation of decreasing price of money (due to supply increase) Second Step: everyone will start buying and spending money until they lose their value Third step: Incremental demand in the market will lead to increasing in the price level
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