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Figure: AD-AS Model II
-(Figure: AD-AS Model II) Refer to Figure: AD-AS Model II. If the central bank reduces the quantity of money that is circulating in the economy, the _____ curve will shift to the _____.

Question

Use the following to answer questions:
Figure: AD-AS Model II

-(Figure: AD-AS Model II) Refer to Figure: AD-AS Model II. If the central bank reduces the quantity of money that is circulating in the economy, the _____ curve will shift to the _____.

Quizplus · Accepted Answer

When the central bank reduces the quantity of money in circulation, it typically leads to a decrease in aggregate demand because there is less money for consumers and businesses to spend. This is represented by a leftward shift of the aggregate demand curve.

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