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Figure a Below Depicts the Demand and Supply of Japanese

Question 51

Multiple Choice

Figure A below depicts the demand and supply of Japanese yen in the foreign currency exchange market. Figure B below depicts the aggregate supply–aggregate demand model for the Japanese economy. Use these figures to answer the following questions. Figure A below depicts the demand and supply of Japanese yen in the foreign currency exchange market. Figure B below depicts the aggregate supply–aggregate demand model for the Japanese economy. Use these figures to answer the following questions.   -Which of the following is the most accurate description of the phenomenon shown in Figure B? A)  The Japanese central bank increased the money supply S<sub>1</sub> to S<sub>2</sub>,which caused the price level to fall from 115 to 110,which then caused the short-run aggregate supply to decrease from SRAS<sub>1</sub> to SRAS<sub>2</sub>. B)  The Japanese central bank increased the money supply S<sub>1</sub> to S<sub>2</sub>,which caused aggregate demand to increase from AD<sub>1</sub> to AD<sub>2</sub>,which then caused the short-run aggregate supply to decrease from SRAS<sub>1</sub> to SRAS<sub>2</sub>. C)  The Japanese central bank decreased the money supply S<sub>1</sub> to S<sub>3</sub>,which caused aggregate demand to decrease from AD<sub>2</sub> to AD<sub>1</sub>,which then caused the short-run aggregate supply to decrease from SRAS<sub>1</sub> to SRAS<sub>2</sub>. D)  The Japanese central bank increased the money supply S<sub>1</sub> to S<sub>2</sub>,which caused real gross domestic product (GDP) to fall from Y<sub>2</sub> to Y<sub>1</sub>,which caused the short-run aggregate supply to decrease from SRAS<sub>1</sub> to SRAS<sub>2</sub>,which then caused aggregate demand to increase from AD<sub>1</sub> to AD<sub>2</sub>. E)  Aggregate demand increased from AD<sub>1</sub> to AD<sub>2</sub>,which forced the Japanese central bank to increase the money supply S<sub>1</sub> to S<sub>2</sub>,which then caused the short-run aggregate supply to decrease from SRAS<sub>1</sub> to SRAS<sub>2</sub>.
-Which of the following is the most accurate description of the phenomenon shown in Figure B?


A) The Japanese central bank increased the money supply S1 to S2,which caused the price level to fall from 115 to 110,which then caused the short-run aggregate supply to decrease from SRAS1 to SRAS2.
B) The Japanese central bank increased the money supply S1 to S2,which caused aggregate demand to increase from AD1 to AD2,which then caused the short-run aggregate supply to decrease from SRAS1 to SRAS2.
C) The Japanese central bank decreased the money supply S1 to S3,which caused aggregate demand to decrease from AD2 to AD1,which then caused the short-run aggregate supply to decrease from SRAS1 to SRAS2.
D) The Japanese central bank increased the money supply S1 to S2,which caused real gross domestic product (GDP) to fall from Y2 to Y1,which caused the short-run aggregate supply to decrease from SRAS1 to SRAS2,which then caused aggregate demand to increase from AD1 to AD2.
E) Aggregate demand increased from AD1 to AD2,which forced the Japanese central bank to increase the money supply S1 to S2,which then caused the short-run aggregate supply to decrease from SRAS1 to SRAS2.

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