Use the Following to Answer Questions

question 2

Multiple Choice

Use the following to answer questions
Figure: Monetary Policy
-(Figure: Monetary Policy) Refer to the figure.Assume that the economy is initially at point Y in the graph.If the Fed takes the appropriate action with monetary policy,but banks are slow to lend,then:

• A) the Fed action would be magnified and the economy would move to point X.
• B) the Fed action would be nullified and the economy would remain at point Y.
• C) the Fed action would be partially effective and the economy would move to point Z.
• D) the LRAS curve would shift to the left.

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Definitions:

Supremacy Clause

A clause in the United States Constitution stating that federal law takes precedence over state laws and constitutions when they conflict.

National Law

The legal rules that apply across an entire nation, forming the country's legal system as distinguished from regional or local laws.

Fundamental Law

A term that generally refers to laws or legal principles that are foundational or essential to the governing of a society, often embodied in a constitution.

State Legislatures

The legislative bodies in each of the United States, responsible for making state laws.