Refer to Figure 12.3 for the following question.
Figure 12.3

-Refer to Figure 12.3. In this figure, suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B. Which of the following policies could the Reserve Bank of Australia use to move the economy to point C?

Question

Refer to Figure 12.3 for the following question.
Figure 12.3
 
-Refer to Figure 12.3. In this figure, suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B. Which of the following policies could the Reserve Bank of Australia use to move the economy to point C?

Quizplus · Accepted Answer

The Reserve Bank of Australia can buy financial securities to increase the money supply, which will lead to lower interest rates and increased investment. This will shift the aggregate demand curve to the right, moving the economy from point B to point C.

Refer to Figure 12.3 for the Following Question