QUESTION 5 10 points Save A Suppose the Fed decides to institute an expansionary

Question

QUESTION 5 10 points Save A Suppose the Fed decides to institute an expansionary monetary policy. What change would we expect to occur in the AD AS model in the short run as a result of this change in policy? O The AS curve would shift to the right O The AS curve would shift to the left. O The AD curve would shift to the right. O The AD curve would shift downwards. QUESTION 6 10 points Save A Suppose that in the medium run most people decrease their expectations about inflation. What change would we expect to occur in the AD AS model? The AS curve would shift upwards O The AS curve would shift downwards The AD curve would shift upwards O The AD curve would shift downwards

Explanation / Answer

Q 5. Option 3: The AD curve would shift to the right.

Explanation: The expansionary monetary policy will increase credit availability, borrowing, and spending which will increase aggregate demand. As a result, AD curve will shift to teh right.

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