Which of the Following Explains Expansionary Monetary Policy in the Long

question 2

Multiple Choice

Which of the following explains expansionary monetary policy in the long run?

• A) Expansionary monetary policy shifts aggregate demand to the left, moving the economy from long-run equilibrium to a short-run equilibrium with a lower price level and a lower level of real gross domestic product (GDP).In the long run, as resource prices fall, the short-run aggregate supply curve shifts to the right, bringing the economy back to a long-run equilibrium where no real changes to GDP have occurred.
• B) Expansionary monetary policy shifts aggregate demand to the right, moving the economy from long-run equilibrium to a short-run equilibrium with a higher price level and a higher level of real GDP.In the long run, as resource prices rise, the aggregate demand curve shifts back to the left, bringing the economy back to a long-run equilibrium where no real changes to GDP have occurred.
• C) Expansionary monetary policy shifts aggregate demand to the right, moving the economy from long-run equilibrium to a short-run equilibrium with a higher price level and a higher level of real GDP.In the long run, as resource prices rise, the short-run aggregate supply curve shifts to the left, bringing the economy back to a long-run equilibrium where no real changes to GDP have occurred.
• D) Expansionary monetary policy shifts aggregate demand to the right, moving the economy from long-run equilibrium to a short-run equilibrium with a higher price level and a higher level of real GDP.In the long run, as resource prices fall, the short-run aggregate supply curve shifts to the right as well, causing the economy to expand.
• E) Expansionary monetary policy shifts aggregate demand to the left, moving the economy from long-run equilibrium to a short-run equilibrium with a lower price level and a lower level of real GDP.In the long run, as resource prices rise, the short-run aggregate supply curve shifts to the left, causing the economy to contract.

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Definitions:

Overhead Allocation

The process of distributing indirect costs to cost objects such as products, services, or business units.

Variable Overhead

Costs that vary indirectly with production volume, such as utilities or indirect materials.

Activity Measure

A metric used to quantify the level of activity, productivity, or performance in a specific area, often used in managerial accounting to allocate costs.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity.