A sudden reduction in intended investment that was accommodated by an increase in the money supply sufficient to cancel those intentions would be best represented by

Question

Quizplus · Accepted Answer

An increase in the money supply to offset a reduction in intended investment would keep the aggregate demand stable, as the increase in money supply would compensate for the decrease in investment, leaving the overall demand unchanged. Thus, there would be no shift in the aggregate demand curve or the price-adjustment schedule.

A Sudden Reduction in Intended Investment That Was Accommodated by an Increase