Figure 10-17



With the passage of time, which of the following will tend to direct this economy in toward its long-run sustainable rate of output?

a.

lower interest rates that will stimulate AD and lower resource prices that will increase SRAS

b.

higher interest rates that will reduce aggregate demand and higher resource prices that will reduce SRAS

c.

lower interest rates and higher resource prices, both of which will stimulate aggregate demand

d.

higher interest rates that will reduce SRAS and lower resource prices that will stimulate aggregate demand

b

Economics

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If the required reserve ratio is 10 percent, currency in circulation is $400 billion, checkable deposits are $800 billion, and excess reserves total $0.8 billion, then the money supply is ________ billion

A) $8000 B) $1200 C) $1200.8 D) $8400

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Financing government spending with taxes

A) causes both reserves and the monetary base to rise. B) causes both reserves and the monetary base to decline. C) causes reserves to rise, but the monetary base to decline. D) has no net effect on the monetary base.

Economics