Multiple Choice
Use the following to answer questions .
Exhibit: Monetary Policy and Long-Run Aggregate Demand and Aggregate Supply 
-(Exhibit: Monetary Policy and Long-Run Aggregate Demand and Aggregate Supply) If the economy is at point c, the Federal Reserve can close the output gap
A) by pursuing an expansionary monetary policy to raise the interest rate and increase short-run aggregate supply.
B) by pursuing a contractionary monetary policy to drive down the interest rate and increase aggregate demand.
C) by pursuing an expansionary monetary policy to drive down the interest rate and increase aggregate demand.
D) by pursuing a contractionary monetary policy to raise the interest rate and short-run aggregate supply.
Correct Answer:
Verified
Correct Answer:
Verified
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