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Question 86

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Use the following to answer questions:
Figure: Monetary Policy I Use the following to answer questions: Figure: Monetary Policy I -(Figure: Monetary Policy I) Refer to Figure: Monetary Policy I. If the economy is initially in equilibrium at E<sub>2</sub> and the central bank chooses to sell Treasury bills: A) AD<sub>2</sub> will shift to the right, causing an inflationary gap. B) AD<sub>2</sub> will shift to AD<sub>1</sub>, causing a recessionary gap. C) SRAS<sub>1</sub> will shift immediately to the left, closing an inflationary gap. D) SRAS<sub>2</sub> will shift immediately to the right, increasing an inflationary gap.
-(Figure: Monetary Policy I) Refer to Figure: Monetary Policy I. If the economy is initially in equilibrium at E2 and the central bank chooses to sell Treasury bills:


A) AD2 will shift to the right, causing an inflationary gap.
B) AD2 will shift to AD1, causing a recessionary gap.
C) SRAS1 will shift immediately to the left, closing an inflationary gap.
D) SRAS2 will shift immediately to the right, increasing an inflationary gap.

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