The figure below shows the price level, real GDP, and the potential output for an economy. According to those who favor a passive approach to policy, the economy will attain equilibrium at potential output when:

A) the SRAS curve will shift to the left.
B) the SRAS curve will shift to the right.
C) either the money supply or government spending is increased.
D) the money supply is decreased.
E) aggregate demand will decrease.

Question

The figure below shows the price level, real GDP, and the potential output for an economy. According to those who favor a passive approach to policy, the economy will attain equilibrium at potential output when:

A) the SRAS curve will shift to the left. 
B) the SRAS curve will shift to the right. 
C) either the money supply or government spending is increased. 
D) the money supply is decreased. 
E) aggregate demand will decrease.

Quizplus · Accepted Answer

The Answer of The figure below shows the price level, real GDP, and the potential output for an economy. According to those who favor a passive approach to policy, the economy will attain equilibrium at potential output when:

A) the SRAS curve will shift to the left. 
B) the SRAS curve will shift to the right. 
C) either the money supply or government spending is increased. 
D) the money supply is decreased. 
E) aggregate demand will decrease.

The Figure Below Shows the Price Level, Real GDP, and the Potential