Figure: Short-Run and Long-Run Effects of Monetary Policy Refer to Figure: Short-Run and Long-Run Effects of Monetary Policy. If the economy is initially at E₂ and the central bank makes no change in its monetary policy: A) AD₂ will shift to the right, increasing the existing inflationary gap. B) AD₂ will shift to the left, closing the inflationary gap. C) SRAS₁ will eventually shift to the left, closing the existing inflationary gap but raising the aggregate price level. D) SRAS₂ will immediately shift to the right, increasing the existing inflationary gap.

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The Answer of Figure: Short-Run and Long-Run Effects of Monetary Policy Refer to Figure: Short-Run and Long-Run Effects of Monetary Policy. If the economy is initially at E₂ and the central bank makes no change in its monetary policy: A) AD₂ will shift to the right, increasing the existing inflationary gap. B) AD₂ will shift to the left, closing the inflationary gap. C) SRAS₁ will eventually shift to the left, closing the existing inflationary gap but raising the aggregate price level. D) SRAS₂ will immediately shift to the right, increasing the existing inflationary gap.