Use the following to answer questions 50-54:
Figure: Monetary Policy and Demand Shocks
-(Figure: Monetary Policy and Demand Shocks) Refer to the figure.In the figure,assume the initial real growth rate of the economy is 3% when a negative aggregate demand shock shifts the AD curve from AD1 to AD2.The correct monetary policy response is to:
A) reduce money supply growth,so that the AD curve shifts back to AD1.
B) reduce money supply growth,so that the AD curve remains at AD2.
C) increase money supply growth,so that the AD curve shifts to AD3.
D) increase money supply growth,so that the AD curve shifts to AD5.
Correct Answer:
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Q37: If businesses react to a pessimistic outlook
Q38: The BEST type of negative shock for
Q39: Which describes one of the difficulties that
Q40: When aggregate demand decreases,the Fed will want
Q41: In the best case scenario,the Federal Reserve
Q43: A negative shock to AD will cause
Q44: An increase in money growth will cause
Q45: If a country's central bank becomes more
Q46: In the AD-AS model,an increase in money
Q47: Use the following to answer questions 50-54:
Figure:
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