Question
Refer to the below diagrams, in which the numbers in parentheses near the AD 1 , AD 2 , and AD 3 labels indicate the
Refer to the below diagrams, in which the numbers in parentheses near the AD1, AD2, and AD3labels indicate the level of investment spending associated with each curve. All figures are in billions. The economy is at pointYon the investment demand curve. Given these conditions, what policy should the Fed pursue to achieve a noninflationary full-employment level of real GDP (Qf)?
A) Increase aggregate demand from AD3to AD2.
B) Make no change in monetary policy.
C) Decrease the money supply from $225 to $150 billion.
D) Increase interest rates from 4 to 8 percent.
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