Question

If the original level of aggregate demand is AD0, then an expansionary monetary policy that shifts aggregate demand to AD1 will only:A. create an inflationary increase in price level.
B. create an increase in GDP.
C. create an increase in unemployment.
D. create a deflationary loss in price level.

Answer 1

Answer:

A. create an inflationary increase in price level.

Explanation:

A shift of the AD curve to AD1 as a result of expansionary monetary policy, indicates that the AD curve increased and shifted to the right.

A shift to the AD curve to the right increase aggregate price and quantity.

I hope my answer helps you.