Question: How would a decrease in the money supply affect aggregate demand and aggregate supply, assuming the central bank s primary objective is to control inflation?

How would a decrease in the money supply affect aggregate demand and aggregate supply, assuming the central banks primary objective is to control inflation?
Question 2Answer
a.
Aggregate demand would shift right, leading to higher output and prices, while aggregate supply shifts left
b.
Aggregate demand would shift left, leading to lower output and prices, while aggregate supply remains unchanged
c.
Aggregate demand and aggregate supply would both shift to the right, leading to higher output and prices
d.
Aggregate supply would shift right, leading to higher output and lower prices, while aggregate demand remains unchanged

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