1.In order to stimulate the sagging European economy, the European Central Bank (ECB) decides to engage in expansionary monetary policy.Your job as one of the advisors to the ECB is to explain to the public what this policy expects to accomplish.

Using a short run aggregate supply and aggregate demand graph, illustrate what happens to the overall economy as a result of this monetary policy.

Which curve shifts?_____________

What happens to the following (up, down, stay the same):

Output: _________________Employment:_____________________

Price levels: ___________________

GRAPH: