Use the Following to Answer Questions 50-54

question 14

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.As a result of the Fed's policy response,the AD curve shifts to AD₃ in the short run.Which of the following is TRUE about the Fed's policy response?

• A) The Fed responded too little to the shock.
• B) The Fed responded too much to the shock.
• C) The Fed provided just the right amount of response to the shock.
• D) The Fed was too fast in responding to the shock.

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Definitions:

Air Traffic Controllers' Union

An organization that represents the interests of air traffic controllers, focusing on matters such as working conditions, safety regulations, and wages.

Union Membership

This refers to individuals who are part of a labor union or trade union, organizations that negotiate with employers on behalf of their members for better wages, benefits, and working conditions.

Mid-1980s

A period marked by significant cultural, political, and technological changes globally, roughly encompassing the years from 1983 to 1987.

AFL-CIO Merger

The unification in 1955 of the American Federation of Labor (AFL) and the Congress of Industrial Organizations (CIO), creating the largest federation of unions in the United States.