Exhibit 17-2
-According to those who favor a passive approach to policy, how will the economy shown in Exhibit 17-2 attain equilibrium at potential output?
A)Real wages will rise causing the SRAS curve to shift left.
B)The SRAS curve will shift to the right.
C)Either the money supply or government spending should be increased.
D)Either the money supply or government spending should be decreased.
E)Aggregate demand should be decreased.

Question

Exhibit 17-2 
-According to those who favor a passive approach to policy, how will the economy shown in Exhibit 17-2 attain equilibrium at potential output?
A)Real wages will rise causing the SRAS curve to shift left. 
B)The SRAS curve will shift to the right. 
C)Either the money supply or government spending should be increased. 
D)Either the money supply or government spending should be decreased. 
E)Aggregate demand should be decreased.

Quizplus · Accepted Answer

The Answer of Exhibit 17-2 
-According to those who favor a passive approach to policy, how will the economy shown in Exhibit 17-2 attain equilibrium at potential output?
A)Real wages will rise causing the SRAS curve to shift left. 
B)The SRAS curve will shift to the right. 
C)Either the money supply or government spending should be increased. 
D)Either the money supply or government spending should be decreased. 
E)Aggregate demand should be decreased.

Exhibit 17-2 -According to Those Who Favor a Passive Approach to Policy