In the market for real output, the initial effect of an increase in the money supply is to

Question

In the market for real output, the initial effect of an increase in the money supply is to
	a. shift aggregate supply to the left. 	
	b. shift aggregate demand to the right. 	
	c. shift aggregate supply to the right. 	
	d. shift aggregate demand to the left.

GPT-4o mini · Answer

The correct answer is: **b. shift aggregate demand to the right.** An increase in the money supply typically leads to lower interest rates, which encourages spending and investment. This increase in overall demand for goods and services results in a rightward shift of the aggregate demand curve.