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-(Figure: AD-AS Model and the Short-Run Phillips Curve) Refer to 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) Refer to 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

The shift in aggregate demand from AD₁ to AD₂ causes an increase in real GDP from Y1 to Y2, which represents an increase of 4% (Y2 - Y1/Y1 x 100 = [(1200-1150)/1150] x 100 = 4%).

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