-Refer to the Above Figure

question 207

Multiple Choice

-Refer to the above figure. Unexpected contractionary monetary policy has caused the aggregate demand curve to shift to AD₂. In the short 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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