-Refer to the Above Figure

question 82

Multiple Choice

-Refer to the above figure. Unexpected expansionary 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 Y1, and the price level will be above P2.
• D) real GDP will be between Y1 and Y2, and the price level will be between P1 and P2.

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Definitions:

Monetary Policy

The process by which a government, central bank, or monetary authority manages the supply of money and interest rates to achieve macroeconomic objectives.

Economic Policy

The strategies and actions taken by a government to manage the economy and influence economic conditions including taxation, government budgets, and interest rates.

Loopholes

Provisions or omissions in laws, taxes, or contracts that allow individuals or entities to avoid or circumvent their intended effect, often leading to exploitation.

Businesses Behavior

The patterns, practices, and ethical decisions made by companies in the pursuit of their objectives, including how they interact with their stakeholders, the environment, and the economy.