- The change illustrated in the figure above is part of the transmission process of the Fed's monetary policy. As a result of the increase in the supply of loanable funds, in the short run aggregate demand _{--------------------}, aggregate supply_{--------------------} , and potential GDP_{--------------------} . A)decreases; increases; increases B)decreases; decreases; decreases C)increases; decreases; decreases D)increases; does not change; does not change E)increases; increases; increases

Question

Quizplus · Accepted Answer

An increase in the supply of loanable funds typically lowers interest rates, which can boost investment and consumption, leading to an increase in aggregate demand. Aggregate supply and potential GDP do not change in the short run due to monetary policy changes.

- the Change Illustrated in the Figure Above Is Part of of the Transmission