The Reserve Bank Responds to an Increase in Unemployment Caused

question 81

Multiple Choice

The Reserve Bank responds to an increase in unemployment caused by a decrease in the AS curve by lowering interest rates. This will
i. shift the aggregate demand curve rightward and raise the price level.
ii. shift the aggregate demand curve rightward and the aggregate supply curve leftward, raising prices.
iii. result in lower employment and a higher price level.

• A) i and ii
• B) ii and iii
• C) iii only
• D) i only
• E) i and iii

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