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Refer to the Graph Above

Question 35

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Refer to the graph above. Assume that the economy is initially in equilibrium at the intersection of AD<sub>1</sub> and AS<sub>1</sub>. Suppose that there is economic growth which shifts AS<sub>1</sub> to AS<sub>2</sub>. With the shift from AS<sub>1</sub> to AS<sub>2</sub>, the monetary rule would call for an increase in the money supply such that: A) AD<sub>1</sub> would shift to AD<sub>2</sub> B) AD<sub>1</sub> would shift to AD<sub>3</sub> C) AD<sub>1</sub> would shift to AD<sub>4</sub> D) AS<sub>2</sub> would shift to AS<sub>1</sub> Refer to the graph above. Assume that the economy is initially in equilibrium at the intersection of AD1 and AS1. Suppose that there is economic growth which shifts AS1 to AS2. With the shift from AS1 to AS2, the monetary rule would call for an increase in the money supply such that:


A) AD1 would shift to AD2
B) AD1 would shift to AD3
C) AD1 would shift to AD4
D) AS2 would shift to AS1

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