Use the following to answer questions :
Figure: Monetary Policy and the AD-SRAS Model
-(Figure: Monetary Policy and the AD-SRAS Model) Look at the figure Monetary Policy and the AD-SRAS Model. An increase in the money supply is most likely to cause a shift:

Question

Use the following to answer questions :
Figure: Monetary Policy and the AD-SRAS Model 
-(Figure: Monetary Policy and the AD-SRAS Model) Look at the figure Monetary Policy and the AD-SRAS Model. An increase in the money supply is most likely to cause a shift:

Quizplus · Accepted Answer

An increase in the money supply will lead to a decrease in interest rates, causing an increase in investment and consumption, leading to a shift to the right in the aggregate demand (AD) curve, from AD to AD'. This is shown in the figure where the vertical line intersects the original AD curve and shifts to intersect the new AD' curve.

Use the Following to Answer Questions