Exhibit 16.3

-Refer to Exhibit 16.3. If the Fed follows the announced course, the aggregate demand curve will be _____ and equilibrium will be at point _____, where the price level is as expected and the economy is producing _____, the potential output.
A) AD, a, Q
B) AD, a, Q'
C) AD, c, Q
D) AD', b, Q'

Question

Exhibit 16.3
 
-Refer to Exhibit 16.3. If the Fed follows the announced course, the aggregate demand curve will be _____ and equilibrium will be at point _____, where the price level is as expected and the economy is producing _____, the potential output.
A) AD, a, Q 
B) AD, a, Q' 
C) AD, c, Q 
D) AD', b, Q'

Quizplus · Accepted Answer

If the Fed follows the announced course, the aggregate demand curve will be AD, equilibrium will be at point a, where the price level is as expected, and the economy is producing Q, the potential output.

Exhibit 16.3 -Refer to Exhibit 16.3. If the Fed Follows the Announced