Suppose the economy is initially in long-run equilibrium. The Fed decides Price Level + to increase the required reserve ratio. In the short-run, this contractionary 122- SRAS2 monetary policy will cause: 120- 118- LRAS O A. A shift from AD, to AD2 and a movement to point B, with a 116- higher price level and higher output. 114- A 112- O B. A shift from SRAS, to SRAS, and a movement to point B, with a SRAS, 110- D lower price level and higher output. 108- B 106- O C. A shift from SRAS, to SRAS, and a movement to point A, with a 104- C higher price level and the same output. 102- AD2 O D. A shift from AD2 to AD, and a movement to point D, with a lower 100- price level and lower output. 98- 96- 94- 92- AD 1 90- 2 4 6 8 12 14 16 Real GDP (trillions of 2000 dollars)