QUESTION 7 Price LRAS Level SRAS, SRAS, P3 P2 P AD 2 AD : Y1 Yz Y3 Quantity of Output Starting from P2 & Y2, the intersection of SRAS1 & AD2 , how might policy makers attempt to reduce inflation and bring the economy to the natural rate of unemployment? increase government spending on roads, bridges and other infrastructure O lower interest rates to promote growth in stock market values reduce the money supply, increasing interest rates to cool excessive aggregate demand Broad based public announcements designed to reduce price expectaions of the general public