Figure 11-5 -Refer to Figure 11-5. If the Economy Is at Point

Multiple Choice

Figure 11-5
-Refer to Figure 11-5. If the economy is at point b, the Federal Reserve can close the output gap

A) by pursuing an expansionary monetary policy to raise the interest rate and decrease short-run aggregate supply.
B) by pursuing a contractionary monetary policy to drive down the interest rate and decrease aggregate demand.
C) by pursuing an expansionary monetary policy to drive down the interest rate and decrease short-run aggregate supply.
D) by pursuing a contractionary monetary policy to raise the interest rate and reduce aggregate demand.