The figure given below shows the aggregate demand curve and the short-run aggregate supply curve of an economy. The Fed can return the economy depicted by this figure to its potential output in the long run by:

A) selling US Treasury securities in the open market.
B) lowering the discount rate.
C) by lowering the reserve requirement.
D) buying US Treasury securities in the open market.
E) printing money.

Question

The figure given below shows the aggregate demand curve and the short-run aggregate supply curve of an economy. The Fed can return the economy depicted by this figure to its potential output in the long run by:

A) selling US Treasury securities in the open market. 
B) lowering the discount rate. 
C) by lowering the reserve requirement. 
D) buying US Treasury securities in the open market. 
E) printing money.

Quizplus · Accepted Answer

The Answer of The figure given below shows the aggregate demand curve and the short-run aggregate supply curve of an economy. The Fed can return the economy depicted by this figure to its potential output in the long run by:

A) selling US Treasury securities in the open market. 
B) lowering the discount rate. 
C) by lowering the reserve requirement. 
D) buying US Treasury securities in the open market. 
E) printing money.

The Figure Given Below Shows the Aggregate Demand Curve and the Short-Run