Monetary policy is used to stabilize the economy by changing factors that shift the:
A) AD curve.
B) SRAS curve.
C) LRAS curve.
D) aggregate demand,short-run aggregate supply,and LRAS curves.

Question

Quizplus · Accepted Answer

Monetary policy is primarily used to shift the AD (aggregate demand) curve, which is a graphical representation of the total amount of goods and services that consumers, businesses, and governments are willing to buy at various price levels. By changing monetary variables such as interest rates, the money supply, and the availability of credit, central banks can influence borrowing and spending behavior, which in turn affects aggregate demand and overall economic activity. Changes in the SRAS (short-run aggregate supply) and LRAS (long-run aggregate supply) curves are more influenced by supply-side factors such as changes in production technology, labor force participation, and government regulations.

Monetary Policy Is Used to Stabilize the Economy by Changing