Test: Exam #8 Time Remaining: 022844 Submit Test This Question: 6 pts 2 of 20 Th

Question

Test: Exam #8 Time Remaining: 022844 Submit Test This Question: 6 pts 2 of 20 This Test: 120 pts possible In the figure at right, if initial equilbrium is at point A and there is a fully anticipated increase in aggregate demand from AD, to AD2 due to an anticipated increase in the money supply, then LRAS SRAS OA, the economy wil move directly from point A to point C without passing through point B the price level will shift to P2 inthe short run the price level will shift to P2 in the long run the economy will move directly firom point A to point B, and will remain at point B in the long run SRAS OB, OC, D. B. P. AD2 ADi Real GDP per Year (S trillions Click to select your answer

Explanation / Answer

Option B

Because of anticipated aggregated demand because of anticipated money supply the aggregate demand shifts to right causing the short run AS to right which increases the price level from P1 to P2

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