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2. Using the AS-AD framework, explain how the economy adjusts to the change in money supply in the long run. Return to the IS

IF YOU ARE NOT GOING TO SHOW A DIAGRAM OR ONLY ANSWER IN ONE SENTENCE PLEASE DO NOT ANSWER!

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e In long run aggregate supply it curve is het vertical in nature Applying monetor y policy in the economy ADICHE - Ab (A) AsZx (MXP) ELM EM IPA YY In ISI LY frame work increase in money supply shifts in curve - to right from LM to LM? Increase in me Consumption also does not change Pas disposable income does not I change. Thus we can say that . monetory policy is neutral

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