-Refer to Exhibit 15-l.A Keynesian monetary policy to eliminate an inflationary gap can be portrayed as a movement between point

Question

Quizplus · Accepted Answer

A Keynesian monetary policy to eliminate an inflationary gap would involve reducing the money supply or increasing interest rates to decrease aggregate demand, moving the economy from a point of high demand and inflation (point D) back to full employment equilibrium (point A).

-Refer to Exhibit 15-L