Homework SourseAccording to the ASAD Model an increase in the money supply
According to the AS/AD Model, an increase in the money supply is appropriate:
| A. | when savings is less than investment. | |
| B. | when savings is greater than investment. | |
| C. | when savings equals investment. | |
| D. | whatever the level of savings and investment. |
Solution
B. when savings is greater than investment.
Increase in money supply shifts the AS curve rightwards which decreases the price level in the economy due to this people are able to save more and invest less.
