-Refer to the above diagrams,in which the numbers in parentheses after the AD₁,AD₂,and AD₃ labels indicate the level of investment spending associated with each curve.All figures are in billions.The economy is at equilibrium at point c on the aggregate demand curve.What policy should the monetary authorities pursue to achieve a non-inflationary full-employment level of real GDP? A) increase the money supply from $75 to $150 billion B) increase the money supply from $150 to $225 billion C) decrease the money supply from $225 to $150 billion D) make no change in the money supply

Question

Quizplus · Accepted Answer

The economy is at equilibrium at point c on the aggregate demand curve. To achieve a non-inflationary full-employment level of real GDP, the monetary authorities should increase the money supply from $75 to $150 billion. This will shift the aggregate demand curve to the right, increasing real GDP and employment.

-Refer to the Above Diagrams,in Which the Numbers in Parentheses