Figure 16-4

-Refer to the Figure 16-4.If the economy is at point c and the Bank of Canada pursues an expansionary monetary policy,then the economy will move to which of the following points in the short run?
A)point b
B)point c
C)point d
D)point h

Question

Figure 16-4
 
-Refer to the Figure 16-4.If the economy is at point c and the Bank of Canada pursues an expansionary monetary policy,then the economy will move to which of the following points in the short run?
A)point b 
B)point c 
C)point d 
D)point h

Quizplus · Accepted Answer

An expansionary monetary policy will lead to a decrease in the interest rate, increase in investment, and increase in aggregate demand. This will cause the economy to move to a higher level of output and price level, which is represented by point d.

Figure 16-4 -Refer to the Figure 16-4.If the Economy Is at Point