If the short-run aggregate supply curve is positively sloped and the Fed increases the money supply,aggregate demand
A)increases,which increases real GDP and the price level
B)increases,which decreases real GDP and the price level
C)falls,which decreases real GDP and increases the price level
D)increases,which decreases real GDP and increases the price level
E)falls,which increases real GDP and the price level

Question

Quizplus · Accepted Answer

Increasing the money supply typically lowers interest rates, which boosts investment and consumption, leading to an increase in aggregate demand. With a positively sloped short-run aggregate supply curve, this increase in aggregate demand results in higher real GDP and a higher price level.

If the Short-Run Aggregate Supply Curve Is Positively Sloped and the Fed