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

Question

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

Quizplus · Accepted Answer

An expansionary monetary policy will shift the AD curve to the right, resulting in a higher equilibrium output at a higher price level. Point b represents the new equilibrium after the shift in the AD curve.

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