Figure: AD and Monetary Policy Refer to the Figure

question 73

Multiple Choice

Figure: AD and Monetary Policy Refer to the figure.Suppose a given economy starts at point A in the figure.If the Fed engages in an expansionary monetary policy,what would you expect to happen in the short run?

• A) Aggregate supply will decrease because of higher wages.
• B) Aggregate demand will decrease because of higher interest rates.
• C) Aggregate demand will increase because of lower interest rates.
• D) The economy will move along the AD curve to a lower inflation rate.

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Definitions:

Absorption

Absorption is the process by which substances are taken into the body's interior, as in the uptake of nutrients by the digestive tract.

Absorption

The process by which substances are taken up into a more assimilable form, such as nutrients from food into the bloodstream.

Peristalsis

A sequence of muscular waves that propel food along the digestive system.

Chemical Digestion

The process in the digestive system where enzymes break down food into small molecules the body can absorb.