If an economy is in a recession and government decides to use open market purchases to close the contractionary gap, would it impact SRAS, AD or LRAS the most?

Expert Answers info

pohnpei397 eNotes educator | Certified Educator

calendarEducator since 2009

write35,413 answers

starTop subjects are History, Literature, and Social Sciences

The greatest impact of open market operations will be on aggregate demand in an economy. 

The most important effect of expansionary open market operations, which closes a contractionary gap, is that they increase the amount of investment that businesses are willing to engage in.  When the money supply increases, it becomes...

(The entire section contains 161 words.)

Unlock This Answer Now

check Approved by eNotes Editorial