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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. If the economy is in a recessionary gap at point f, it could move to point g as a result of:

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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. If the economy is in a recessionary gap at point f, it could move to point g as a result of:

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An increase in the money supply would shift the AD curve to the right, from AD1 to AD2, causing the economy to move from point f to point g in the short run. Option A (a decrease in the money supply) would shift the AD curve to the left, making the recessionary gap worse. Option B (a rise in the discount rate) would cause investment to decrease and AD to shift to the left, also worsening the recessionary gap. Option D (sales of government securities in the open market) would decrease the money supply and cause interest rates to rise, which would decrease consumption and investment and cause AD to shift leftward, making the recessionary gap worse.

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