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-Refer to the Above Figure

Question 85

Multiple Choice

-Refer to the above figure. Unexpected contractionary monetary policy has caused the aggregate demand curve to shift to AD<sub>2</sub>. In the short run, A) the unemployment rate will be the same rate as before the expansionary monetary policy. B) the unemployment rate will be larger than the rate before the expansionary monetary policy. C) the unemployment rate will be smaller than the rate before the expansionary monetary policy. D) the unemployment rate can increase or decrease depending upon how much the LRAS will shift.
-Refer to the above figure. Unexpected contractionary monetary policy has caused the aggregate demand curve to shift to AD2. In the short run,


A) the unemployment rate will be the same rate as before the expansionary monetary policy.
B) the unemployment rate will be larger than the rate before the expansionary monetary policy.
C) the unemployment rate will be smaller than the rate before the expansionary monetary policy.
D) the unemployment rate can increase or decrease depending upon how much the LRAS will shift.

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