Refer to the graphs, in which the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve. All figures are in billions. The economy is at point X on the investment demand curve. Given these conditions, what policy should the Fed pursue to achieve a noninflationary full-employment level of real GDP?
A. Decrease aggregate demand from AD1 to AD2
B. Increase the money supply from $75 to $150 billion
C. Increase interest rates from 4 to 8 percent
D. Make no change in monetary policy
B. Increase the money supply from $75 to $150 billion
You might also like to view...
If the federal government has a budget deficit, then it is definitely the case that
A) the tax revenue exceed government outlays. B) the tax revenue and government outlays are equal. C) the tax revenue is falling and government outlays are rising. D) government outlays exceed tax revenue. E) the tax revenue is rising and government outlays are falling.
When referring to GDP, which is not a common alternative designation economists use?
A. Net National Income B. Total Output C. National Income D. Aggregate Expenditure