According to Keynesians, an increase in the money supply will have its greatest impact on GDP...
According to Keynesians, an increase in the money supply will have its greatest impact on GDP when the aggregate demand curve intersects:
a. the upward sloping portion of the aggregate supply curve.
b. either the upward sloping or the vertical portions of the aggregate supply curve
c. the vertical portion of the aggregate supply curve.
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d. the horizontal portion of the aggregate supply curve. |
Homework Answers
According to Keynesians , an increase in the money supply will have its greatest impact on GDP when the aggregate demand curve intersects the horizontal portion of the aggregate supply curve because when money supply increases , then aggregate demand curve shifts to the right and if AD intersects the horizontal portion of the AS curve,then the shift in AD fully reflects in increase in GDP. Hence, option(D) is correct.
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