In the graph, demonstrate the short-run effect of an increase in the growth rate of the money supply, assuming all else remains equal. What happens in the long run? LRAS O As expectations adjust to the increase, all curves shift back to their original locations. The SRAS curve shifts to the left, and the inflation rate SRAS increases, with no change in the growth rate. O The AD curve shifts to the right, and both the real growth rate and inflation rate increase. O The LRAS curve shifts to the right, and the real growth rate increases, with no change in the inflation rate. AD Real GDP growth rate Inflation rate (x)
In the graph, demonstrate the short-run effect of an increase in the growth rate of the money supply, assuming all else remains equal. What happens in the long run? LRAS O As expectations adjust to the increase, all curves shift back to their original locations. The SRAS curve shifts to the left, and the inflation rate SRAS increases, with no change in the growth rate. O The AD curve shifts to the right, and both the real growth rate and inflation rate increase. O The LRAS curve shifts to the right, and the real growth rate increases, with no change in the inflation rate. AD Real GDP growth rate Inflation rate (x)
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter34: The Influence Of Monetary And Fiscal Policy On Aggregate Demand
Section: Chapter Questions
Problem 4CQQ
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