In Response to a Financial Liquidity Shortage,if the Central Bank

Multiple Choice

In response to a financial liquidity shortage,if the central bank increases the money supply,

A) aggregate demand shifts to the right, correcting the liquidity shortage.
B) output increases and the price level remains constant.
C) output increases and the price level increases.
D) aggregate demand shifts further left, exacerbating the problem.
E) aggregate supply shifts right, offsetting the decrease in aggregate demand.