Question

Suppose that in response to a recession, a government increases the amount of money in circulation. How does this impact the aggregate demand curve (at least in the short run)?

Answer 1

Step-by-step explanation:

The aggregate demand curve, or AD curve, shifts to the right as the components of aggregate demand—consumption spending, investment spending, government spending, and spending on exports minus imports—rise. The AD curve will shift back to the left as these components fall.