-In the above figure, if we start at AD₁ and SRAS₁, and the money supply increases unexpectedly, what would be the short-run equilibrium even with rational expectations?

Question

Quizplus · Accepted Answer

With an unexpected increase in the money supply, the aggregate demand curve shifts to the right from AD₁ to AD₂, leading to a new short-run equilibrium at E₂, even with rational expectations.

-In the Above Figure, If We Start at AD₁ and SRAS₁