4 questions on "Government policies and Aggregate Demand - Monetary Policy"

What happens if the quantity of money in the hands of households and firms changes?
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Who controls the quantity of money in circulation?
the quantity of money in circulation is largely determined by the decisions of the central bank created by the government
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  • what happens when the central bank decreases the quantity of money in circulation?
  • when the central bank increases the quantity of money in circulation
    • households an firms have less money,
    • which leads them to borrow more and lend less
    • this effect is to increase interest rate any aggregate price level,
    • leading to a reduces investment spending and higher consumer spending
    • shifting the aggregate demand curve to the left
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How does monetary policy increase/decrease the aggregate demand
Increasing the quantity of money shifts aggregate demand curve to the right
reducing the quantity of money shifts aggregate demand curve to the left
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