Those who advocate the use of monetary policy believe that an increase in the money supply will shift the aggregate:
A) Supply curve to the left.
B) Supply curve to the right.
C) Demand curve to the left.
D) Demand curve to the right.

Question

Quizplus · Accepted Answer

Advocates of monetary policy believe that increasing the money supply will stimulate spending, ultimately shifting the aggregate demand curve to the right. This shift increases both real GDP and the price level, resulting in economic growth. Therefore, an increase in the money supply will shift the aggregate demand curve to the right.

Those Who Advocate the Use of Monetary Policy Believe That