Figure 17-4
-Refer to Figure 17-4. If the economy is at point c and the Bank of Canada pursues an expansionary monetary policy, then the economy will move to which point in the short run?

Question

Figure 17-4 
-Refer to Figure 17-4. If the economy is at point c and the Bank of Canada pursues an expansionary monetary policy, then the economy will move to which point in the short run?

Quizplus · Accepted Answer

An expansionary monetary policy will shift the AD curve to the right, leading to higher output and price levels. Thus, the new equilibrium will be at a point to the right of point c, which is point d.

Figure 17-4 -Refer to Figure 17-4. If the Economy Is at Point