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Refer to the Graph Shown

question 101

Multiple Choice

Refer to the graph shown. Suppose the economy is initially at A but then the Fed adopts a contractionary monetary policy. Using the standard AS/AD model reasoning, this policy will cause the economy to move to: Refer to the graph shown. Suppose the economy is initially at A but then the Fed adopts a contractionary monetary policy. Using the standard AS/AD model reasoning, this policy will cause the economy to move to:   A) B in the short run and the long run. B) A in the short run and the long run. C) C in the short run and A in the long run. D) C in the short run and E in the long run.


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