Suppose Short-Run Aggregate Supply Shifts to the Left Because of a Decrease

question 210

Multiple Choice

Suppose short-run aggregate supply shifts to the left because of a decrease in the supply of steel. The Federal Reserve fights the resulting recession with expansionary monetary policy. This will

• A) increase interest rates.
• B) decrease inflation.
• C) cause inflation.
• D) increase unemployment.

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Definitions:

Pigment

Substances that impart color to materials or organisms; in biological contexts, they absorb certain wavelengths of light and reflect others, visible to the human eye as color.

Chlorophyll

A green pigment found in the chloroplasts of plants, algae, and some bacteria, essential for photosynthesis.

Wavelength

Distance between the crests of two successive waves.