Asked by Kevin Narais on Mar 10, 2024
Verified
An increase in the money supply shifts the long-run aggregate supply curve to the right.
Long-Run Aggregate Supply
Represents the total output an economy can produce when both capital and labor resources are fully employed at their highest productivity levels.
Money Supply
The sum of all financial assets, such as cash, coins, and the amounts in checking and savings accounts, present in an economy at a given time.
- Understand the relationship between aggregate supply, aggregate demand, and economic equilibrium.
Verified Answer
NN
Nicolas NelsonMar 10, 2024
Final Answer :
False
Explanation :
An increase in the money supply does not shift the long-run aggregate supply curve; it primarily affects the aggregate demand curve by increasing demand for goods and services, which can lead to higher prices in the short run but does not affect the economy's long-run productive capacity.
Learning Objectives
- Understand the relationship between aggregate supply, aggregate demand, and economic equilibrium.
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