Figure 17-2 Use the Pair of Diagrams Below to Answer the Following

question 325

Multiple Choice

Figure 17-2
Use the pair of diagrams below to answer the following questions.

-Refer to Figure 17-2. If the economy starts at C and 1, then in the short run, a decrease in the money supply moves the economy to

• A) E and 1.
• B) D and 2.
• C) D and 3.
• D) None of the above is correct.

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Definitions:

Government Policy

Actions or inactions chosen by government officials to address specific public issues, ranging from economic regulations to social welfare programs.

Natural Rate

Often refers to the natural rate of unemployment, which is the level of unemployment consistent with a stable rate of inflation, or the equilibrium rate unaffected by short-term fluctuations.

Fully Employed

Refers to a situation where all available labor resources are being used in the most economically efficient way.

GDP

Gross Domestic Product, the total market value of all final goods and services produced within a country in a specific time period.