Price Level AS SRAS Real Domestic Output, GDP 47. The successful use of contract

Question

Price Level AS SRAS Real Domestic Output, GDP 47. The successful use of contractionary policy in this economy will result in efigure above. An increasein the price level, decrease in real GDP, and an increase in unemployment. Refer to b)An increasein the price level, increase in real GDP, and a decrease in unemployment. c A decrease in the price level, decrease in real GDP, and a decrease in unemployment d) A decrease in the price level, decrease in real GDP, and an increase in unemployment 48. Refer toeAgure above. lfaggregate demand is at ADs which of th e following is the appropriate monetary policy to follow? a an expansionary policy inv olving increasing the required reserve ratio, increasing the discount rate and/or selling bonds. b) an expansionary policy involving decreasing the required reserve ratio, decreasing the discount rate and/or selling bonds c) a contractionary policy involving increasing the required reserve ratio, decreasing the discount rate and/or buying bonds. d) a contractionary policy involving increasing the required reserve ratio, increasing the di scount rate and/or selling bonds e an expansionary policy involving decreasing the required reserve ratio, decreasing the discount rate and/or buying bonds

Explanation / Answer

Answer.)

Q47.) d.) A decrease in price level, decrease in real GDP, and an increase in unemployment

Contractionary policy would shift AD curve leftward resulting in decrease in price level, decrease in real GDP, and an increase in unemployment.

Q48.) d.) a contractionary policy involving increasing the required reserve ratio, increasing the discount rate and/or selling bonds.

Contractionary monetary policy would shift AD curve from AD2 to AD1. Contractionary monetary policy includes:-  increasing the required reserve ratio, increasing the discount rate and selling bonds.

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