Figure 4 -Refer to Figure 4 Above.Assuming That Y₂ Represents a Level

Multiple Choice

Figure 4

-Refer to Figure 4 above.Assuming that Y₂ represents a level of national income lower than the full employment level, and that inflation has remained unchanged after the event that caused the IS curve to shift, what should the monetary authorities do if they wish to reduce unemployment?

A) Increase the money supply.
B) Reduce the money supply.
C) Advise the government to raise taxes.
D) Advise the government to reduce taxes.