Use the Following to Answer Questions

question 46

Multiple Choice

Use the following to answer questions:
Figure: Monetary Policy II
-(Figure: Monetary Policy II) Refer to Figure: Monetary Policy II. To eliminate the inflationary gap from the short-run equilibrium at Y₂, monetary policy should be:

• A) expansionary.
• B) contractionary.
• C) neutral.
• D) balanced.

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