Use the Following to Answer Questions 50-54

question 149

Multiple Choice

Use the following to answer questions 50-54:
Figure: Monetary Policy and Demand Shocks
-(Figure: Monetary Policy and Demand Shocks) Refer to the figure.In the figure,assume the initial real growth rate of the economy is 3% when a positive aggregate demand shock shifts the AD curve from AD₁ to AD₄.The correct monetary policy response is to:

• A) reduce money supply growth,so that the AD curve shifts back to AD₁.
• B) reduce money supply growth,so that the AD curve remains at AD₄.
• C) increase money supply growth,so that the AD curve shifts to AD₃.
• D) increase money supply growth,so that the AD curve shifts to AD₅.

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Definitions:

Factors Of Production

The inputs used in the creation of goods or services in order to make an economic profit, including land, labor, capital, and entrepreneurship.

Input

Resources used in the production of goods and services.

Output

The total amount of goods or services produced by an individual or entity in a given period.

Function

In mathematics, a relation or expression involving one or more variables, where each input value yields one and only one output value.