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Economics (AS & A Level) · Oct / Nov 2025 · Paper 12 · Question 22

9708Monetary policy

What is the effect of an increase in the money supply on the interest rate and the aggregate demand (AD) curve?

  1. Ainterest rate falls; AD curve shifts left
  2. Binterest rate rises; AD curve shifts left
  3. Cinterest rate falls; AD curve shifts right
  4. Dinterest rate rises; AD curve shifts right

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Correct answer: C. interest rate falls; AD curve shifts right

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