The Impact of a Change in the Money Supply in the Long Run: Theory and Evidence The quantity theory of money is shown using aggregate demand and aggregate supply. The economy is initially in equilibrium at point e. The long-run aggregate supply curve is vertical (long-run full employment at $15 trillion), while the aggregate demand curve reflects a money supply of $2.0 trillion. Increasing the money supply to $2.2 trillion (a 10% increase) shifts aggregate demand upward to AD_($2.2T), resulting in a new equilibrium at point b, where the aggregate price level rises by 10%, yet real output remains constant. The price level rise is equal to the percentage increase in the money supply. Monetary growth and inflation for thirty countries from 1972 to 2012 supports this theory.