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.