A Decrease in Real Money Supply Caused by an Increase

question 23

Multiple Choice

A decrease in real money supply caused by an increase in the price level is graphically represented by

• A)a shift of the AD-curve to the right
• B)a shift of the AD-curve to the left
• C)movement along the AD-curve to the right
• D)movement along the AD-curve to the left
• E)a shift of the AS-curve to the right

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Definitions:

Inflation

A universal surge in prices and a dip in the value of monetary assets.

Real GDP

The measure of a country's economic output adjusted for price changes or inflation.

Value Added

The increase in the value of a product or service as a result of a particular process, excluding the costs of raw materials and energy.

Intermediate Products

Intermediate products are goods that are used as inputs in the production of other goods or services, rather than being sold directly to consumers.