Question: With reference to Figure 19.12, determine what would happen if the monetary policy that shifts the nations aggregate demand curve to the right to AD

With reference to Figure 19.12, determine what would happen if the monetary policy that shifts the nation’s aggregate demand curve to the right to AD′ in order to adjust to stagflation also leads to growth that keeps the nation’s long-run aggregate supply curve at LRAS in the long run.

Figure 19.12

SRAS LRAS LRAS SRAS AD AD

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