In thinking about monetary and fiscal policies there are a l

In thinking about monetary and fiscal policies there are a lot of models with different graphs involved. Let’s focus for a minute on some of the relationships between them.

A. Graph an increase in the money supply and the most likely effect this will have on the AD/AS model. Explain briefly the link between the two graphs. (4 points)

B. Graph an increase in aggregate supply. What effect is this likely to have on the Phillips curve? (4 points)

Solution