The graph shown displays the relationship between money and the interest rate. If the money supply in the economy is currently at M^S2, and the Fed uses open market operations to move the money supply to M^S1, what is the overall effect on the economy? A) Aggregate demand decreases, causing GDP to fall. B) Aggregate supply decreases, causing GDP to fall. C) Aggregate demand increases, causing GDP to rise. D) The LRAS curve moves to the FE level of output.

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The Answer of The graph shown displays the relationship between money and the interest rate. If the money supply in the economy is currently at M^S2, and the Fed uses open market operations to move the money supply to M^S1, what is the overall effect on the economy? A) Aggregate demand decreases, causing GDP to fall. B) Aggregate supply decreases, causing GDP to fall. C) Aggregate demand increases, causing GDP to rise. D) The LRAS curve moves to the FE level of output.

The Graph Shown Displays the Relationship Between Money and the Interest