According to the simple quantity theory of money,an increase in the money supply will shift the __________ curve to the right and raise __________.

Question

Quizplus · Accepted Answer

According to the simple quantity theory of money, an increase in the money supply will lead to an increase in aggregate demand (AD) which will shift the AD curve to the right. As a result, this will cause an increase in the price level. Therefore, the correct answer is C which states that an increase in the money supply will shift the AD curve to the right and raise the price level.

According to the Simple Quantity Theory of Money,an Increase in the Money