Answer to Question #58002 in Macroeconomics for mixalis_katsaros

Question

FED increases the ammount of money
1) is there a difference in the composition of national income before and after the aply of this policy?

Answer 1

If FED increases the amount of money there will be no difference in the composition of national income before and after the apply of this policy, because the change in money supply may change only the interest rates and the rate of inflation but not the composition of GDP.