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How does an expansion of the money supply affect the aggregate-demand curve? How does your answer differ if we consider a closed economy versus an

  1. How does an expansion of the money supply affect the aggregate-demand curve? How does your answer differ if we consider a closed economy versus an open economy?
  2. An increase in the interest rate discourages private firms from making new investments in factories. How does the sensitivity of investment to changes in the interest rate affect the amount by which monetary policy influences aggregate-demand?

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