Refer to the following figure to answer the following questions.
-According to the figure,expansionary monetary policy starting at full-employment equilibrium will go from point ________ to point ________ in the short run and then to point ________ in the long run.
A) A; B; A
B) A; D; A
C) A; D; C
D) A; B; C
E) C; B; A

Question

Refer to the following figure to answer the following questions. 
-According to the figure,expansionary monetary policy starting at full-employment equilibrium will go from point ________ to point ________ in the short run and then to point ________ in the long run.
A) A; B; A 
B) A; D; A 
C) A; D; C 
D) A; B; C 
E) C; B; A

Quizplus · Accepted Answer

Expansionary monetary policy starts at point A with full-employment equilibrium. In the short run, prices and wages are sticky, so the AD curve shifts right to AD' causing higher output and employment at point B. In the long run, prices and wages fully adjust, the SRAS curve shifts left to SRAS'', and the economy returns to full-employment equilibrium at point C with a higher price level than before.

Refer to the Following Figure to Answer the Following Questions