-Which aggregate supply-aggregate demand diagram above shows the effect on real GDP and the price level of monetary policy when it is used to fight a recession?
A) only Figure A
B) only Figure B
C) both Figure A and Figure B
D) neither Figure A nor Figure B

Question

-Which aggregate supply-aggregate demand diagram above shows the effect on real GDP and the price level of monetary policy when it is used to fight a recession?
A) only Figure A 
B) only Figure B 
C) both Figure A and Figure B 
D) neither Figure A nor Figure B

Quizplus · Accepted Answer

Monetary policy used to fight a recession typically involves increasing the money supply, which shifts the aggregate demand curve to the right, increasing real GDP and the price level. Figure A likely shows this effect.

-Which Aggregate Supply-Aggregate Demand Diagram Above Shows the Effect on Real