The graph shows a hypothetical aggregate demand (AD) curve, short-run aggregate supply (SRAS) curve, and long-run aggregate supply (LRAS) curve for the U.S. economy in April 2014.

If no policy action is taken, then in the long-run the price level in the U.S. economy will be _ and the aggregate output level will be _.

A. 120; 24

B. 100; 26

C. 100; 24

D. 110; 25

Answer Key: A

Suppose that, in April 2014, Congress wants to bring the economy to its natural rate of output. Congress should adopt a(n) __ policy which will shift the to the .

A. contractionary fiscal; AD curve; right

B. contractionary monetary; SRAS curve; right

C. contractionary monetary; SRAS curve; left

D. expansionary fiscal; AD curve; right

E. expansionary monetary; SRAS curve; left

F. expansionary fiscal; AD curve; left

G. contractionary fiscal; AD curve; left

H. expansionary monetary; SRAS curve; right

Answer Key: G

NAIMMCQ

The graph shows a hypothetical aggregate demand (AD) curve, short-run aggregate supply (SRAS) curve, and long-run aggregate supply (LRAS) curve for the U.S. economy in April 2014.

The graph shows a hypothetical aggregate demand (AD) curve, short-run aggregate supply (SRAS) curve, and long-run aggregate supply (LRAS) curve for the U.S. economy in April 2014.

If no policy action is taken, then in the long-run the price level in the U.S. economy will be _______ and the aggregate output level will be _______.

Suppose that, in April 2014, Congress wants to bring the economy to its natural rate of output. Congress should adopt a(n) __________ policy which will shift the ____________ to the ________.

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If no policy action is taken, then in the long-run the price level in the U.S. economy will be _ and the aggregate output level will be _.

Suppose that, in April 2014, Congress wants to bring the economy to its natural rate of output. Congress should adopt a(n) __ policy which will shift the to the .