By analyzing aggregate demand via its component parts,we can conclude that changes in the money supply
A)have no effect on aggregate demand.
B)affect aggregate demand in the opposite direction of the change in government spending.
C)affect aggregate demand in the same direction as the change in government spending.
D)affect the quantity of aggregate output demand.

Question

Quizplus · Accepted Answer

According to the components of aggregate demand, an increase in the money supply would lead to an increase in consumption, investment, and net exports. This would result in an overall increase in aggregate demand, which is in the same direction as a change in government spending. Therefore, the correct answer is C.

By Analyzing Aggregate Demand Via Its Component Parts,we Can Conclude