Use the Figure Below to Answer the Following Question(s)

question 103

Multiple Choice

Use the figure below to answer the following question(s) . Figure 14-5
In Figure 14-5, AD₁ and SRAS₁ indicate an economy initially operating at full-employment output level, Y₁. The long-run impact of the Fed unexpectedly shifting to a more restrictive monetary policy will be

• A) a decrease in aggregate demand to AD₂ and a decrease in real output to Y₂.
• B) a decrease in the full-employment level of output to Y₂.
• C) a decrease in aggregate demand to AD₂ and an increase in short-run aggregate supply to SRAS₂, causing the price level to fall to P₃ and real output to remain unchanged at Y₁.
• D) no change; AD and SRAS will stay at AD₁ and SRAS₁.

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Definitions:

Simulation

A process of modeling the operation of a real-world system or process over time.

Scarce Resources

Assets, materials, or commodities that are limited in supply but high in demand, often leading to allocation challenges.

Open System

An organizational model that interacts with its environment by exchanging information, materials, and energy.

Outputs

The final products, services, or results generated by a process, system, or organization.