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Refer to the Following Figure to Answer the Next Three

Question 79

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Refer to the following figure to answer the next three questions:
Refer to the following figure to answer the next three questions:    -According to the figure,if the policy is fully expected,expansionary monetary policy will cause an economy initially in full-employment equilibrium to see its price level: A)  increase from P₁ to P₃. B)  increase from P₁ to P₂. C)  initially increase from P₁ to P₂ and over time increase to P₃. D)  decrease from P₃ to P₂. E)  decrease from P₃ to P₁.
-According to the figure,if the policy is fully expected,expansionary monetary policy will cause an economy initially in full-employment equilibrium to see its price level:


A) increase from P₁ to P₃.
B) increase from P₁ to P₂.
C) initially increase from P₁ to P₂ and over time increase to P₃.
D) decrease from P₃ to P₂.
E) decrease from P₃ to P₁.

Correct Answer:

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