Refer to the graph. Which of the following would best be explained by an expansionary monetary policy?
A. A shift from SML 1 to SML 2 .
B. A shift from SML 2 to SML 1 .
C. A move from A 1 to A 2 .
D. A move from A 2 to A 3 .
B. A shift from SML 2 to SML 1 .
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In the permanent-income hypothesis incorporating rational expectations, the short-run MPC is high when changes in current income
A) are small. B) are considered a good predictor of future income changes. C) are considered a poor predictor of future income changes. D) occur when the economy is nearing cyclical peaks or troughs.
The macroeconomy is said to be in long-run equilibrium only if
a. the resource, loanable funds, foreign exchange, and goods and services markets are all in equilibrium. b. prices were incorrectly estimated by decision makers. c. the output of the economy exceeds the full-employment level of output. d. the economy is operating along its short-run aggregate supply curve.