Suppose the economy is initially in long-run equilibrium. The Fed decides to increase the required reserve ratio. In the short-run, this contractionary monetary policy will cause: O A. A shift from SRAS₂ to SRAS, and a movement to point B, with a lower price level and higher output. O B. A shift from AD₁ to AD₂ and a movement to point B, with a higher price level and higher output. OC. A shift from SRAS, to SRAS₂ and a movement to point A, with a higher price level and the same output. OD. A shift from AD₂ to AD₁ and a movement to point D, with a lower price level and lower output. 122- 120- 118- 116- 114- 112- 110- 108- 106- 104- 102- 100- 98- 96- 94- 92- 90- 0 Price Level D LRAS B 2 4 ढ 10 12 Real GDP (trillions of 2000 dollars) SRAS₂ SRAS₁ AD2 AD1 14 16

Suppose the economy is initially in long-run equilibrium. The Fed decides to increase the required reserve ratio. In the short-run, this contractionary monetary policy will cause: O A. A shift from SRAS₂ to SRAS, and a movement to point B, with a lower price level and higher output. O B. A shift from AD₁ to AD₂ and a movement to point B, with a higher price level and higher output. OC. A shift from SRAS, to SRAS₂ and a movement to point A, with a higher price level and the same output. OD. A shift from AD₂ to AD₁ and a movement to point D, with a lower price level and lower output. 122- 120- 118- 116- 114- 112- 110- 108- 106- 104- 102- 100- 98- 96- 94- 92- 90- 0 Price Level D LRAS B 2 4 ढ 10 12 Real GDP (trillions of 2000 dollars) SRAS₂ SRAS₁ AD2 AD1 14 16

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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