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Refer to Figure 16

Question 115

Multiple Choice

  Refer to Figure 16.4.If the economy is initially in equilibrium at P<sub>3</sub> and Q<sub>1</sub>,which of the following policies would move the economy to equilibrium at P<sub>2</sub> and Q<sub>3</sub>? A) Contractionary monetary policy alone. B) A combination of restrictive fiscal policy and restrictive monetary policy. C) Restrictive supply-side policy alone. D) A combination of expansionary monetary policy and expansionary supply-side policy. Refer to Figure 16.4.If the economy is initially in equilibrium at P3 and Q1,which of the following policies would move the economy to equilibrium at P2 and Q3?


A) Contractionary monetary policy alone.
B) A combination of restrictive fiscal policy and restrictive monetary policy.
C) Restrictive supply-side policy alone.
D) A combination of expansionary monetary policy and expansionary supply-side policy.

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