Use the Following to Answer Questions

question 242

Multiple Choice

Use the following to answer questions :
Figure: Monetary Policy I
-(Figure: Monetary Policy I) Look at the figure Monetary Policy I. If the economy is initially in equilibrium at E₂ and the central bank chooses to sell Treasury bills_____ shift to _____ a(n) _____ gap.

• A)AD₂ will; right, causing; inflationary
• B)AD₂ may; AD₁, causing; recessionary
• C)AD₁ may; AD₂, closing; recessionary
• D)AD₁ will; left, increasing; recessionary

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