If the money supply increases, there will be:
A) a shift of the aggregate-demand curve
B) no effect on the aggregate-demand curve
C) a shift of the aggregate-supply curve
D) a movement along the aggregate-demand curve

Question

Quizplus · Accepted Answer

An increase in the money supply will lead to a lower interest rate, which will encourage more spending and investment in the economy. This increase in spending will lead to a shift in the aggregate-demand curve to the right, as there will be a higher level of demand at each price level.

If the Money Supply Increases, There Will Be