Use the following to answer questions:
-(Figure: AD-AS)Refer to Figure: AD-AS.If our economy is at equilibrium and the Bank of Canada uses expansionary monetary policy,_____ will shift to _____ and the economy will move from _____.Then nominal wages will _____ and _____ will shift to _____.The economy will move from _____.

Question

Use the following to answer questions: 
-(Figure: AD-AS)Refer to Figure: AD-AS.If our economy is at equilibrium and the Bank of Canada uses expansionary monetary policy,_____ will shift to _____ and the economy will move from _____.Then nominal wages will _____ and _____ will shift to _____.The economy will move from _____.

Quizplus · Accepted Answer

Expansionary monetary policy shifts the AD curve from AD1 to AD2, moving the economy from E1 to E2. As the economy adjusts, nominal wages rise, causing the SRAS curve to shift from SRAS1 to SRAS2, moving the economy from E2 to E3.

Use the Following to Answer Questions