Show the effects of a permanent increase in the money supply.

(1 )   AA-shifts right-increase in Y and E both higher than if money supply change was temporary rising price level makes AD decrease, DD shifts left
(2 )   rising prices also reduce real money supply, so AA shifts left (although not all the way back to original position)
(3 )   AA and DD reach short run equilibrium at an E that is higher than initially, but lower than the short run effects of the shift.
(4 )   Output returns to initial level because higher prices reversed the effect of the initial depreciation on Aggregate Demand.

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