Figure 9.1 -Refer to Figure 9.1. an Increase in the Money Supply

question 62

Multiple Choice

Figure 9.1
-Refer to Figure 9.1. An increase in the money supply causes:

• A) the aggregate demand curve to shift from AD₁ to AD₂.
• B) the aggregate demand curve to shift from AD₁ to AD₀.
• C) the economy to move from Point A to Point B, but will not shift the aggregate demand curve.
• D) neither a shift of the aggregate demand curve nor a change in real GDP.

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Definitions:

Net Capital Spending

The total spending on fixed assets minus the proceeds from the sale of fixed assets.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares of the issuing corporation's stock, rather than cash.

Retained Earnings

The portion of net income not distributed as dividends to shareholders but retained by the company for reinvestment in its core business, or to pay debt.

Common Stock

A type of equity ownership in a corporation, where holders have voting rights and potentially receive dividends.