When the central bank following an expansionary monetary policy, they cause the money supply to increase, which increases aggregate demand.
A rise in the money supply as a result of the central bank's expansionary monetary policy raises aggregate demand. A country's total demand for goods and services is known as aggregate demand. The law of demand makes the assumption that the other factors affecting demand remain constant.
The quantity of purchasers in the economy is the sixth factor, which only influences total demand. The aggregate demand is made up of five elements. Everything created in a country and everything bought there are the same thing. As a result, the economy's GDP is equal to the level of aggregate demand.
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