An economy is operating at full employment. If the central bank gradually increases the money supply by 5 percent, what will happen in the long run according to the quantity theory of money? Choose an option.
1.Nominal output will increase by 5 percent.
2.The unemployment rate will decrease by 5 percent.
3. Overall employment will increase by 5 percent.
4.Real output will increase by 5 percent.
5. The price level will decrease by 5 percent.
