In terms of the aggregate demand and aggregate supply model, an expansionary monetary policy is designed to shift the:
A)aggregate demand curve rightward.
B)aggregate demand curve leftward.
C)aggregate supply curve rightward.
D)aggregate supply curve leftward.

Question

Quizplus · Accepted Answer

An expansionary monetary policy involves increasing the money supply, reducing interest rates, and stimulating borrowing and spending, which leads to an increase in consumption, investment, and net exports. As a result, there will be an increase in aggregate demand, which shifts the aggregate demand curve rightward.

In Terms of the Aggregate Demand and Aggregate Supply Model