A Contractionary Monetary Policy Is Most Likely to Reduce Output

question 1

Multiple Choice

A contractionary monetary policy is most likely to reduce output with little impact on inflation when the economy

• A)is near full employment and the aggregate supply curve is horizontal.
• B)is near full employment and the aggregate supply curve is vertical.
• C)has substantial unemployment and the aggregate supply curve is vertical.
• D)has substantial unemployment and the aggregate supply curve is horizontal.

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