Use the Following to Answer Questions 50-54

question 149

Multiple Choice

Use the following to answer questions 50-54:
Figure: Monetary Policy and Demand Shocks
-(Figure: Monetary Policy and Demand Shocks) Refer to the figure.In the figure,assume the initial real growth rate of the economy is 3% when a positive aggregate demand shock shifts the AD curve from AD₁ to AD₄.The correct monetary policy response is to:

• A) reduce money supply growth,so that the AD curve shifts back to AD₁.
• B) reduce money supply growth,so that the AD curve remains at AD₄.
• C) increase money supply growth,so that the AD curve shifts to AD₃.
• D) increase money supply growth,so that the AD curve shifts to AD₅.

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Definitions:

Limited Liability Partnerships

A business structure that allows partners to have limited liabilities, which means they are not personally liable for the debts of the business.

Portfolio Composition

The breakdown of assets within an investment portfolio, classified by type, sector, risk, or other criteria.

Temporary Misalignments

Short-term discrepancies between the prices or values of related financial instruments or market sectors that are expected to correct over time.

Arbitrage Strategy

An investment strategy aiming to profit from price differences of the same asset across different markets without market risk.