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Problem B: Contractionary Monetary Policy Think about under what conditions of AD, ERAS, and LRAS the Fed would want to enact contractionagj monetary policy. On
Problem B: Contractionary Monetary Policy Think about under what conditions of AD, ERAS, and LRAS the Fed would want to enact contractionagj monetary policy. On the left graph, draw the AD, SRl-XS, and LRAS functions before and after this policy, assuming the policy brings the economy to longrun equilibrium. 0n the right graph, draw the money supply and money demand before and after this policy. Clearly label all axes, functions, and relevant points and shifts or movements on both graphs! L L
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