Final answer:
A positive rate of money growth leads to a rightward shift in the money supply curve, potentially causing inflation and a rise in the overall price level. A rightward shift in the AS curve indicates productivity gains, which is separate from changes in money supply. In the long run, increased money supply causes inflation without affecting real GDP or the natural unemployment rate.
Step-by-step explanation:
If the rate of money growth is positive, the long-run model of the money market indicates different outcomes than suggested in the question. Contrary to a leftward shift of the money supply (MS) line, a positive money growth rate would actually cause the MS line to shift to the right as there is more money circulating in the economy. This increase in money supply, assuming a stable demand for money, typically leads to a decrease in the value of money due to inflationary pressures. Over time, this can result in a rise in the overall price level, as each unit of currency now buys less than it did before.
As per long-term economic models, an increase in the aggregate supply (AS) would actually occur due to productivity gains, not an increase in the money supply. A shift to the right in the AS curve signifies economic growth and could lead to a higher real GDP and potentially lower price levels if the aggregate demand remains unchanged. However, the long-term effects of an increased money supply are more consistent with higher inflation rather than an increased AS, as shown in the Aggregate Demand/Aggregate Supply (AD/AS) model. An expansionary monetary policy by the Fed, involving an increase in the money supply, would typically shift the AD curve to the right, indicating higher demand and potentially closing a recessionary gap, but in the long run, would lead to inflation without increasing real GDP or changing the unemployment rate if aggregate demand rises rapidly.