The following graph combines the DD and AA schedules to locate short-run equilibrium. Note exchange rate E is measured as dollars per euro. The current output is at its full-employment level yf. Exchange rate DD E AA yf Output Y All else being equal, a permanent increase in money supply causes AA curve to shift rightward in the short-run and cause the output to be greater than its full-employment level Yf. Because productive factors are working over-time, in the long-run, the [Select] is rising to keep up the rising production costs. This change will influence [Select] DD curve will [Select] because of [Select] The AA curve will [Select] in the long-run and eventually the long run equilibrium will be restored where the output level is equal to Y. The following graph combines the DD and AA schedules to locate short-run equilibrium. Note exchange rate E is measured as dollars per euro. The current output is at its full-employment level yf. Exchange rate DD E AA yf Output Y All else being equal, a permanent increase in money supply causes AA curve to shift rightward in the short-run and cause the output to be greater than its full-employment level Yf. Because productive factors are working over-time, in the long-run, the [Select] is rising to keep up the rising production costs. This change will influence [Select] DD curve will [Select] because of [Select] The AA curve will [Select] in the long-run and eventually the long run equilibrium will be restored where the output level is equal to Y