Aggregate Price Level Assume that the United States government introduces an expansionary monetary policy, increasing the money supply in the market. Using the graph below, demonstrate the long run effect on aggregate demand and short run aggregate supply. Then, answer the question to the right. LRAS Real GDP SRAS AD In the classical model of the price level, what is the long run effect of an increase in the money supply on real GDP? it increases GDP it decreases GDP it has no effect on GDP

Aggregate Price Level Assume that the United States government introduces an expansionary monetary policy, increasing the money supply in the market. Using the graph below, demonstrate the long run effect on aggregate demand and short run aggregate supply. Then, answer the question to the right. LRAS Real GDP SRAS AD In the classical model of the price level, what is the long run effect of an increase in the money supply on real GDP? it increases GDP it decreases GDP it has no effect on GDP

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781305971509

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 5CQQ

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