Multiple Choice
Suppose that the central bank is required to follow a monetary policy rule to stabilize prices.If the economy starts at long-run equilibrium and then aggregate supply shifts right,the central bank would have to
A) increase the money supply,which causes output to move closer to its long-run equilibrium.
B) increase the money supply,which causes output to move farther from long-run equilibrium.
C) decrease the money supply,which causes output to move closer to its long-run equilibrium.
D) decrease the money supply,which causes output to move farther from long-run equilibrium.
Correct Answer:
Verified
Correct Answer:
Verified
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