Solved

Which of the Following Explains Contractionary Monetary Policy in the Long

Question 52

Multiple Choice

Which of the following explains contractionary monetary policy in the long run?


A) Contractionary monetary policy shifts aggregate demand to the left,moving the economy from long-run equilibrium to a short-run equilibrium with a lower price level and a lower level of real gross domestic product (GDP) .In the long run,as resource prices fall,the short-run aggregate supply curve shifts to the right,bringing the economy back to a long-run equilibrium,where no real changes to GDP have occurred.
B) Contractionary monetary policy shifts aggregate demand to the right,moving the economy from long-run equilibrium to a short-run equilibrium with a higher price level and a higher level of real gross domestic product (GDP) .In the long run,as resource prices rise,the aggregate demand curve shifts back to the left,bringing the economy back to a long-run equilibrium,where no real changes to GDP have occurred.
C) Contractionary monetary policy shifts aggregate demand to the right,moving the economy from long-run equilibrium to a short-run equilibrium with a higher price level and a higher level of real gross domestic product (GDP) .In the long run,as resource prices rise,the short-run aggregate supply curve shifts to the left,bringing the economy back to a long-run equilibrium,where no real changes to GDP have occurred.
D) Contractionary monetary policy shifts aggregate demand to the right,moving the economy from long-run equilibrium to a short-run equilibrium with a higher price level and a higher level of real gross domestic product (GDP) .In the long run,as resource prices fall,the short-run aggregate supply curve shifts to the right as well,causing the economy to expand.
E) Contractionary monetary policy shifts aggregate demand to the left,moving the economy from long-run equilibrium to a short-run equilibrium with a lower price level and a lower level of real gross domestic product (GDP) .In the long run,as resource prices rise,the short-run aggregate supply curve shifts to the left,causing the economy to contract.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents