Decrease in the money supply on aggregate demand

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Define carefully the difference between movements along the AD curve and shifts of the AD curve. Explain why an increase in potential output would shift out the AS curve and lead to a movement along the AD curve. Explain why a tax cut would shift the AD curve outward (increase aggregate demand). What would be the effect of a decrease in the money supply (a monetary tightening) on aggregate demand?

Reference no: EM13998692

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