A change in the money supply or a change in velocity will change aggregate demand,which causes the aggregate demand curve to shift.

Question

Quizplus · Accepted Answer

An increase in the money supply or an increase in velocity will shift the aggregate demand curve to the right, indicating a higher level of real GDP and price level. A decrease in the money supply or a decrease in velocity will shift the aggregate demand curve to the left, indicating a lower level of real GDP and price level. Therefore, changes in the money supply or velocity can affect aggregate demand and cause the aggregate demand curve to shift.

A Change in the Money Supply or a Change in Velocity