Use the Following to Answer Questions

question 212

Multiple Choice

Use the following to answer questions
Figure: Shifts in SRAS and AD
-(Figure: Shifts in SRAS and AD) If the economy is at short-run equilibrium point b because of a negative supply shock,the Fed could enact an expansionary monetary policy,thus shifting the new equilibrium to point _____.As a result of this,the price level would _____ and real output would _____.

• A) a;decrease;further decrease
• B) c;further increase;increase
• C) d;decrease;increase
• D) No monetary policy would have any effect;the equilibrium will remain at point b.

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Definitions:

Present Value Calculations

The process of determining the current value of a future sum of money or stream of cash flows, taking into account a specific rate of return or discount rate.

Natural Resources

Raw materials and resources found in the environment that are used for economic gain, such as minerals, forests, water, and fertile land.

Net Benefits

The difference between the total benefits and total costs associated with an economic decision or project.

Greater Extraction

Refers to the increased removal of natural resources, such as minerals, fossil fuels, or timber from the environment, often for commercial purposes.