If the economy is represented in the graph shown and is currently at point E2, which action is the Fed most likely to undertake?

A. Contractionary monetary policy, because it will shift AD to the left.
B. Expansionary monetary policy, because it will shift AD to the right.
C. Expansionary monetary policy, because it will shift AD to the left.
D. Contractionary monetary policy, because it will shift AS to the right.


Answer: B

Economics

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Suppose McDonald's puts up five new stores in San Francisco using the exact same floor plan, capital equipment and number of workers, then the long run average cost curve of McDonald's would be ________ and the company experiences ________.

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