Use the Following to Answer Questions

question 63

Multiple Choice

Use the following to answer questions .
Exhibit: Monetary Policy and Long-Run Aggregate Demand and Aggregate Supply
-(Exhibit: Monetary Policy and Long-Run Aggregate Demand and Aggregate Supply) If the economy is at point b, the Federal Reserve can close the output gap

• A) by pursuing an expansionary monetary policy to raise the interest rate and decrease short-run aggregate supply.
• B) by pursuing a contractionary monetary policy to drive down the interest rate and decrease aggregate demand.
• C) by pursuing an expansionary monetary policy to drive down the interest rate and decrease short-run aggregate supply.
• D) by pursuing a contractionary monetary policy to raise the interest rate and reduce aggregate demand.

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