Multiple Choice
Exhibit 16-5 
-To bring the economy shown in Exhibit 16-5 to its potential output level, the Fed could
A) do nothing and the price level would fall to P'
B) do nothing and the price level would remain at its current level
C) increase the money supply and increase the price level to P"
D) increase the money supply and decrease the price level to P'
E) decrease the money supply and decrease the price level to P'
Correct Answer:
Verified
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