Refer to the graph shown. Monetary policy that shifts the AD curve from AD0 to AD2 is
A. contractionary.
B. neither expansionary nor contractionary since it does not affect output.
C. expansionary.
D. neither expansionary nor contractionary since it does not affect inflation.
Answer: A
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If you liquidate $3,000 of your mutual fund and transfer the funds to your checking account, then initially, M1 will ________ and M2 will ________
A) increase; decrease B) increase; not change C) not change; not change D) not change; decrease
Assume that at the current level of output produced by a perfectly competitive firm, MR = $7.50 and MC = $6. In order to maximize its profit, the firm should increase output
Indicate whether the statement is true or false
Judging from this graph, which of the following happens if supply remains unchanged and demand increases?
a. Quantity becomes indeterminate.
b. Quantity falls.
c. Price falls.
d. Price rises.
The only way that a society can produce outside the production possibilities curve is
A) through economic growth. B) by producing efficiently. C) by obeying the Law of Increasing Additional Cost. D) to use the concept of opportunity cost.