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Question: Consider the following quote:

There are two forces that cause the economy to grow. One is real, the other is an illusion. The real force-entrepreneurial innovation and creativity- comes naturally as long as government policies do not drive it away. The artificial force is easy money. An increased supply of money, by creating an illusion of wealth, can increase spending in the short run, but this eventually turns into inflation. Printing money cannot possibly create wealth; if it could, counterfeiting would be legal.14

Does this quote illustrate the short run versus the long-run aspects of monetary policy? Why or why not?

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M92292153

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