When the Fed enacts monetary policy,in the short run it changes
A) the AD curve.
B) the SAS curve.
C) both the AD and SAS curves.
D) potential GDP.

Question

Quizplus · Accepted Answer

When the Fed enacts monetary policy, it changes the money supply and interest rates, which impact consumption, investment, and net exports. These changes in turn influence aggregate demand (AD), causing it to shift to the left or right. Therefore, the short-run effect of monetary policy is typically seen as a shift in the AD curve rather than the short-run aggregate supply (SAS) curve or potential GDP.

When the Fed Enacts Monetary Policy,in the Short Run It