Suppose U.S. aggregate output is still below potential by 2018, when a new Fed chair is appointed. Suppose his or her approach to monetary policy can be summarized by the following statement: “I care only about increasing employment; inflation has been at very low levels for quite some time; my priority is to ease monetary policy to promote employment.”

a) Would you expect the monetary policy curve to shift upward or downward?

b) What would be the effect on the aggregate demand curve?