Suppose that the money supply increases. In the short run this decreases unemployment according to

Question

Quizplus · Accepted Answer

According to the short-run Phillips curve, an increase in the money supply will lead to lower unemployment (since it stimulates demand and encourages hiring), while in the aggregate demand and aggregate supply model, it will shift the AD curve to the right, producing a short-term increase in both output and employment. Therefore, option A is the correct choice.

Suppose That the Money Supply Increases