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In Figure 8

Question 35

Multiple Choice

In Figure 8.5,if this economy's inflation goal is a price level of P<sub>2</sub> but the equilibrium price level is P<sub>3</sub>,an appropriate monetary policy lever would be to A) Decrease AS by increasing the money supply. B) Decrease AD by increasing interest rates. C) Decrease AD by increasing income taxes. D) Increase AS by increasing the money supply. In Figure 8.5,if this economy's inflation goal is a price level of P2 but the equilibrium price level is P3,an appropriate monetary policy lever would be to


A) Decrease AS by increasing the money supply.
B) Decrease AD by increasing interest rates.
C) Decrease AD by increasing income taxes.
D) Increase AS by increasing the money supply.

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