-Refer to the Above Figure

question 47

Multiple Choice

-Refer to the above figure. Unexpected expansionary monetary policy has caused the aggregate demand curve to shift to AD₂. In the long run

• A)the unemployment rate will be the same rate as before the expansionary monetary policy.
• B)the unemployment rate will be larger than the rate before the expansionary monetary policy.
• C)the unemployment rate will be smaller than the rate before the expansionary monetary policy.
• D)the unemployment rate can increase or decrease depending upon how much the LRAS will shift.

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Definitions:

Consumption

The process of using goods and services to satisfy wants or needs.

Revealed Preferences

An economic theory that infers preferences of consumers by observing choices made under budget constraints, instead of through direct inquiry of preferences.

Francs

Currency units formerly used in France and currently used in some countries of the Francophone world, including Switzerland and some African countries.

Consumption

The use of goods and services by households, contributing to their satisfaction and utility.