Figure 15-7
-Refer to Figure 15-7.Suppose the economy is in a recession and the Fed pursues an expansionary monetary policy.Using the basic AD-AS model in the figure above,this would be depicted as a movement from

Question

Figure 15-7 
-Refer to Figure 15-7.Suppose the economy is in a recession and the Fed pursues an expansionary monetary policy.Using the basic AD-AS model in the figure above,this would be depicted as a movement from

Quizplus · Accepted Answer

An expansionary monetary policy by the Fed would result in an increase in the money supply, leading to lower interest rates and increased investment and consumption. This would shift the AD curve to the right, from A to B, resulting in higher output and employment in the short run.

Figure 15-7 -Refer to Figure 15-7.Suppose the Economy Is in a Recession