The AD curve will: shift right, shift left or remain unchanged? When the Fed ado
ID: 1096715 • Letter: T
Question
The AD curve will: shift right, shift left or remain unchanged?
When the Fed adopts a looser monetary policy and raises its long-run targetforvthebinflation rate, what will happen to the AD and AS curves?
The AD curve shifts right, creating an expansionary gap, and inflation rises above expected inflation. The AS curve shifts to the right and inflation is lower.
The AD curve shifts to the right, creating an expansionary gap, and inflation rises above ecmxpected inflation. The AS curve shifts left; output goes back to potential output, but inflation is higher.
The AD curve shifts left, creating a recessionary gap, and inflation is less than expected inflation. The AS curve shifts to left, output goes back to potential output, but inflation is higher.
The AD curve shifts left, creating a recessionary gap, and inflation is lower than expected inflation. The AS curve shifts right, output is higher than potential output, but inflation is lower How will this change in monetary policy will affect the AD curve? The AD curve will: shift right, shift left or remain unchanged? When the Fed adopts a looser monetary policy and raises its long-run targetforvthebinflation rate, what will happen to the AD and AS curves? The AD curve shifts right, creating an expansionary gap, and inflation rises above expected inflation. The AS curve shifts to the right and inflation is lower. The AD curve shifts to the right, creating an expansionary gap, and inflation rises above ecmxpected inflation. The AS curve shifts left; output goes back to potential output, but inflation is higher. The AD curve shifts left, creating a recessionary gap, and inflation is less than expected inflation. The AS curve shifts to left, output goes back to potential output, but inflation is higher. The AD curve shifts left, creating a recessionary gap, and inflation is lower than expected inflation. The AS curve shifts right, output is higher than potential output, but inflation is lower Suppose the economy is intially in long-run equilibrium and the Fed adopts a looser monetary policy and raises its long-run target for the inflation rate. Suppose the economy is initally in long-run equilibrium and the Fed adopts a looser money A. How will this change in monetary policy will affect the AD curve? The AD curve will: shift right, shift left or remain unchanged? When the Fed adopts a looser monetary policy and raises its long-run targetforvthebinflation rate, what will happen to the AD and AS curves? The AD curve shifts right, creating an expansionary gap, and inflation rises above expected inflation. The AS curve shifts to the right and inflation is lower. The AD curve shifts to the right, creating an expansionary gap, and inflation rises above ecmxpected inflation. The AS curve shifts left; output goes back to potential output, but inflation is higher. The AD curve shifts left, creating a recessionary gap, and inflation is less than expected inflation. The AS curve shifts to left, output goes back to potential output, but inflation is higher. The AD curve shifts left, creating a recessionary gap, and inflation is lower than expected inflation. The AS curve shifts right, output is higher than potential output, but inflation is lower
Explanation / Answer
1.
Thus, AD curve will shift to the right.
2.
The AD curve shifts to the right, creating an expansionary gap, and inflation rises above expected inflation. The AS curve shifts left; output goes back to potential output, but inflation is higher.
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