Question

In the two-curve version of the AD-AS model (with only the LRAS and AD curves included),...

In the two-curve version of the AD-AS model (with only the LRAS and AD curves included), an increase in money supply growth will:

Select one:

a. cause the economy’s real growth rate to increase.

b. cause a positive real shock.

c. cause the inflation rate to increase.

d. All of the above are correct.

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Answer #1

"D"

It will shift the aggregate demand curve to shift to the right and the new equilibrium will be at a higher price and higher output. All the statements are correct.

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