Which of the Following Explains Contractionary Monetary Policy in the Long

question 91

Multiple Choice

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

• A) Contractionary 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) Contractionary 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) Contractionary 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) Contractionary 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) Contractionary 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:

Bid

An acronym in medical prescribing that stands for "bis in die" which means "twice a day".

Tid

An acronym in medical prescriptions standing for "ter in die," which means three times a day.

Prn

An abbreviation for "pro re nata," a Latin phrase meaning “as the situation demands” used in healthcare to instruct that medication should be taken as needed.

Sig

A term used in prescriptions, derived from "Signa," indicating the dose, frequency, and manner of taking a medication.