Because the Fed increased the money supply after the recession in the early 1990s,the
A) AD curve shifted to the left
B) economy returned to equilibrium GDP at a price level that was lower than the original price level
C) price level continued to increase after the recession ended
D) price level fell back to its original level
E) long-run equilibrium GDP decreased

Question

Quizplus · Accepted Answer

Increasing the money supply typically leads to higher aggregate demand, which can cause the price level to rise, especially after a recession when the economy is recovering.

Because the Fed Increased the Money Supply After the Recession