Exhibit 16.4 -Refer to Exhibit 16.4. If the Fed Announces It Plans

Multiple Choice

Exhibit 16.4

-Refer to Exhibit 16.4. If the Fed announces it plans to keep prices stable at P' but workers and firms, expect monetary policy to be expansionary, then their expectations are depicted by the short-run aggregate supply curve SRAS at a price level ____

A) P.
B) P'.
C) P".
D) between 0 and P'.
E) between P' and P.