A change in monetary policy will not cause the AD curve to shift.

Question

Quizplus · Accepted Answer

A change in monetary policy, such as an increase in the money supply or a change in interest rates, can affect consumer and business spending, investment, and borrowing, which can in turn shift the aggregate demand (AD) curve. For example, if the central bank increases the money supply, it can lower interest rates, which can stimulate borrowing and investment, and increase consumer spending, shifting the AD curve to the right. Conversely, if the central bank tightens monetary policy, it can raise interest rates, reduce borrowing and investment, and decrease consumer spending, shifting the AD curve to the left.

A Change in Monetary Policy Will Not Cause the AD