-Refer to the Above Figure

question 289

Multiple Choice

-Refer to the above figure. Unexpected contractionary monetary policy has caused the aggregate demand curve to shift to AD2. In the long run

• A) real GDP will be Y1, and the price level will be P1.
• B) real GDP will be Y2, and the price level will be P2.
• C) real GDP will be between Y1 and Y2, and the price level will be above P1.
• D) real GDP will be between Y1 and Y2, and the price level will be below P2.

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Definitions:

Foreign Goods

Products or services that are produced in other countries and imported into the domestic market.

Rate Of Inflation

The percentage increase in the price level of goods and services in an economy over a period of time, typically measured annually.

Foreign Currency

A currency used in a country that is not one's own, representing the money of other nations.

Appreciate

Appreciate, in economic terms, refers to an increase in the value of an asset or currency.