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-(Figure: Monetary Policy and the AD-SRAS Model)Refer to 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:

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

Quizplus · Accepted Answer

An increase in the money supply would shift the AD curve to the right, which would result in an increase in real GDP and price level. This would move the economy from point f to point g, which is closer to potential GDP and reduces the recessionary gap.

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