An increase in the quantity of money
A) decreases the aggregate quantity demanded.
B) increases the aggregate quantity demanded.
C) decreases aggregate demand.
D) increases aggregate demand.

Question

Quizplus · Accepted Answer

An increase in the quantity of money leads to an increase in spending by consumers and businesses, increasing the aggregate demand. This is because with more money in circulation, people have more purchasing power and can buy more goods and services. As the demand for goods and services increases, businesses respond by producing more, leading to an increase in aggregate demand.

An Increase in the Quantity of Money