Refer to the following figure to answer the following questions.
-According to the figure,if an expansionary monetary policy is fully expected,that policy will cause an economy initially in full-employment equilibrium to move from point
A) A to B.
B) A to B and back to A.
C) A to B to C.
D) A to C and back to A.
E) A to C.

Question

Refer to the following figure to answer the following questions. 
-According to the figure,if an expansionary monetary policy is fully expected,that policy will cause an economy initially in full-employment equilibrium to move from point
A) A to B. 
B) A to B and back to A. 
C) A to B to C. 
D) A to C and back to A. 
E) A to C.

Quizplus · Accepted Answer

An expansionary monetary policy, when fully expected, typically leads to an increase in aggregate demand, moving the economy from full-employment equilibrium (point A) to a higher output level (point C) without returning to the original point.

Refer to the Following Figure to Answer the Following Questions