If is relatively high, monetary policy is relatively ________ and the AD curve is ________.
A) permissive; relatively flat
B) aggressive; relatively steep
C) aggressive; relatively flat
D) permissive; relatively steep
E) permissive; vertical

Question

If  is relatively high, monetary policy is relatively ________ and the AD curve is ________.
A) permissive; relatively flat 
B) aggressive; relatively steep 
C) aggressive; relatively flat 
D) permissive; relatively steep 
E) permissive; vertical

Quizplus · Accepted Answer

A high value for 11eab38d_0703_edfc_a5fb_93b9f304d72d_TB6622_11 indicates an aggressive monetary policy, which is likely to shift the AD curve to the right. However, it is not necessarily the case that the AD curve becomes steep or vertical, as the slope of the AD curve depends on many other factors besides monetary policy. Therefore, option C is the best choice as it reflects the aggressive monetary policy, but does not make any assumptions about the shape of the AD curve.

If Is Relatively High, Monetary Policy Is Relatively ________