if ask for short run effect of an expansionary monetory policy, then the SRAS not moved, just follow the curve to the right, it will imply a temporary increase in price, decrease of real interest rate, and increase of real GDP. but how dose that increawse employement? I think in the long run, it will shift SRAS up, and AD up, so the real GDP not change, but price got increased, which imply a decrease in real interest. Is it? Thanks.
expansionary monetary policy increases AD ie. shifts it to the right. In the short run, SRAS hasn’t changed yet, price and real output in increased. How do you get more real output? You hire more workers.