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Figure: AD-AS Model and the Short-Run Phillips Curve
-(Figure: AD-AS Model and the Short-Run Phillips Curve) Look at the figure AD-AS Model and the Short-Run Phillips Curve. If the central bank increases the money supply so that aggregate demand shifts from AD₁ to AD₂, then real GDP will increase by:

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Figure: AD-AS Model and the Short-Run Phillips Curve

-(Figure: AD-AS Model and the Short-Run Phillips Curve) Look at the figure AD-AS Model and the Short-Run Phillips Curve. If the central bank increases the money supply so that aggregate demand shifts from AD₁ to AD₂, then real GDP will increase by:

Quizplus · Accepted Answer

According to the figure, an increase in aggregate demand from AD₁ to AD₂ leads to an increase in both output and price level. Real GDP increases from Y1 to Y2, which is a 4% increase (i.e., [(Y2-Y1)/Y1] x 100%). Therefore, the correct answer is C.

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