Exhibit 14-5 -Refer to the Graph in the Exhibit.To Bring the Economy

Multiple Choice

Exhibit 14-5

-Refer to the graph in the exhibit.To bring the economy to its potential output level, what should the Bank of Canada do?  

A)  The Bank of Canada should do nothing, and the price level will fall to P′. 
B)  The Bank of Canada should do nothing, and the price level will remain at its current level. 
C)  The Bank of Canada should increase the money supply and decrease the price level to P′. 
D)  The Bank of Canada should decrease the money supply and decrease the price level to P′.