Refer to the information provided in Figure 17.2 below to answer the questions that follow. Figure 17.2 -Refer to Figure 17.2. According to the monetarists, a recession can be caused when A) AD₁ shifts to the right. B) AD₁ shifts to the left. C) AS₁ shifts to the left. D) LRAS shifts to the left.

Question

Quizplus · Accepted Answer

Monetarists believe that changes in the money supply can cause shifts in the aggregate demand curve. If the money supply decreases, this will cause a leftward shift in the AD curve, leading to a decrease in real GDP and potentially a recession. Therefore, the correct answer is B, AD₁ shifts to the left. Choices A, C, and D do not accurately reflect the monetarist view of recessions.

Refer to the Information Provided in Figure 17