In the market for real output, the initial effect of an increase in the money supply is to ?
Correct answer: D. shift the aggregate demand curve to the right
- A. shift the aggregate supply curve to the right
- B. shift the aggregate supply curve to the left
- C. shift the aggregate demand curve to the left
- D. shift the aggregate demand curve to the right
Explanation
An increased money supply lowers interest rates and raises interest-sensitive spending, producing an initial rightward shift of aggregate demand. The question asks about the immediate demand-side effect, not a later supply response.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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