Draw an aggregate supply/aggregate demand diagram to show the short run effect of this scenario. What happens to price and output? Which curve shifts? Which component of that curve accounts for the shift?

8. In this scenario, money might be neutral in the long run, and it might not. How could the short run change described above lead to a long run result that has higher prices but no change in output from the original value? Explain in graphs and word.

9. It is possible that money is not neutral even in the long run. How could the short run change described above lead to a long run result with higher output than the original value? Explain in graphs and words.