each of the following statements label from the drop-down menu. An expansionary

Question

each of the following statements label from the drop-down menu. An expansionary monetary policy will shift the Select answer of money in the economy increases curve to the right as the amount After the above mentioned curve shifts, a new Select answer point is established in the market. In response to the shift of the first curve, nominal wages will begin to adjust upward, leading to a eventual leftward shift of the Select answer When the eventual new long run equilbrium point is reached, the effect of an increase in the money supply onSelect answer long-run.GDP will be neutral in the Long-Run Aggregate Supply the price level Aggregate Demand Short-Run Aggregate Supply Equilibrium

Explanation / Answer

Aggregate demand, equilibrium, short run aggregate supply, GDP

An expansionary monetary policy leads to increase in money supply which increases aggregate demand. This increases GDP and leads to inflation and hence nominal wages increase. Due to this, cost of production increases and hence, short-run aggregate supply decrease. This also decreases GDP. So, Change in GDP becomes zero.

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