Refer to the diagrams. The numbers in parentheses after the AD 1 , AD 2 , and AD 3 labels indicate the levels of investment spending associated with each curve. All figures are in billions. If aggregate demand is AD 3 and the monetary authorities desire to reduce it to AD 2 , they should:
A. increase the interest rate from 3 percent to 9 percent.
B. increase the money supply from $100 to $120.
C. decrease the money supply from $120 to $100.
D. decrease the interest rate from 3 percent to 9 percent.
C. decrease the money supply from $120 to $100.
You might also like to view...
Tracy and Amy are playing a game in which Tracy has the first move at X in the decision tree shown below. Once Tracy has chosen either the top or bottom branch at X, Amy, who can see what Tracy has chosen, must choose the top or bottom branch at Y or Z. Both players know the payoffs at the end of each branch. 
If before Tracy chose, Amy could make a credible commitment to choose either the top or bottom branch when her turn came, then Amy would commit to the ________ branch and Tracy would choose the ________ branch.
A. top; top B. top; bottom C. bottom; bottom D. bottom; top
Laws regulating pollution emissions can change the size of the economic pie
Indicate whether the statement is true or false
If real GDP has increased, which of the following statements is always true?
A) Nominal GDP has increased. B) Output has increased. C) Prices have remained the same. D) Output might have decreased if prices have risen enough.
In the short run, a firm that is a price taker will stay in business as long as
a. price equals average revenue. b. marginal revenue is greater than or equal to marginal cost. c. price exceeds average variable cost. d. price is less than average variable cost.