Exhibit 16.1 -Refer to Exhibit 16.1, Which Shows the Relationship Between an the Relationship

Multiple Choice

Exhibit 16.1

-Refer to Exhibit 16.1, which shows the relationship between an economy's potential output, price level, and real GDP. According to those who favor a passive approach to policy, the economy will attain equilibrium at potential output when _____

A) the short-run aggregate supply curve shifts to the left.
B) the short-run aggregate supply curve shifts to the right due to a fall in real wages.
C) government spending increases.
D) the money supply increases.
E) aggregate demand decreases.