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 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.
Correct Answer:
Verified
Correct Answer:
Verified
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