Solved: Real money supply in a fully employed economy, Macroeconomics

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Real money supply in a fully employed economy

Question:

"An increase in transfers (TR) will not affect the level of real GDP or the real money supply in a fully employed economy."

Comment on this statement with the help of (1) an AD-AS diagram (using a long-run aggregate supply curve for this fully-employed economy operating at potential) and (2) an IS-LM diagram.

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Macroeconomics: Real money supply in a fully employed economy

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