Refer to the above graphs, in which the numbers in parentheses near the AD1, AD2
ID: 1092948 • Letter: R
Question
Refer to the above graphs, in which the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve, respectively. All numbers are in billions of dollars. The level of investment spending in the economy is $90 billion. What should the monetary authorities do to achieve the long-run goal of a noninflationary full-employment output Qf in the economy? Increase the interest rate from 6 to 8 percent. Decrease the interest rate from 8 to 6 percent. Decrease the interest rate from 6 to 4 percent. Make no change in the interest rate.
Explanation / Answer
Decrease from 8 to 6