Figure 14-5
In , AD1 and SRAS1 indicate an economy initially operating at full-employment output level, Y1. The long-run impact of the Fed unexpectedly shifting to a more restrictive monetary policy will be
a.
a decrease in aggregate demand to AD2 and a decrease in real output to Y2.
b.
a decrease in the full-employment level of output to Y2.
c.
a decrease in aggregate demand to AD2 and an increase in short-run aggregate supply to SRAS2, causing the price level to fall to P3 and real output to remain unchanged at Y1.
d.
no change; AD and SRAS will stay at AD1 and SRAS1.
c
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