Refer to the information provided in Figure 32.2 below to answer the question(s) that follow. Figure 32.2 -Refer to Figure 32.2. According to ________, a(n) ________ monetary policy in the short run and after all the adjustments have been made increases equilibrium output above Y₁. A) Keynes; contractionary B) Keynes; expansionary C) the new classicals; contractionary D) the new classicals; expansionary

Question

Quizplus · Accepted Answer

According to Figure 32.2, an expansionary monetary policy increases aggregate demand and shifts the AD curve to the right. This leads to an increase in equilibrium output (Y) above the initial level of YS1. Therefore, the correct option is B - Keynes; expansionary.

Refer to the Information Provided in Figure 32