Use the following to answer questions:
-(Figure: Monetary Policy and the AD-SRAS Model)Refer to Figure: Monetary Policy and the AD-SRAS Model.The economy may move from point i to point h as a result of:

Question

Use the following to answer questions: 
-(Figure: Monetary Policy and the AD-SRAS Model)Refer to Figure: Monetary Policy and the AD-SRAS Model.The economy may move from point i to point h as a result of:

Quizplus · Accepted Answer

An increase in the money supply would shift the AD curve to the right, causing the economy to move from point i to point h. A rise in the bank rate (B) would decrease investment spending and shift the AD curve to the left, causing a movement from point i to a point below it. A decrease in the money supply (C) would shift the AD curve to the left, causing a movement from point i to a point below it. Sales of government securities in the open market (D) would decrease the money supply and shift the AD curve to the left, causing a movement from point i to a point below it.

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