Question 7 Refer to the figure. In the figure, assume the initial real growth rate of the economy is 3 percent when a negative aggregate demand shock shifts the AD curve from AD, to AD,. As a result of the Fed's policy response, the AD curve shifts to AD2 in the short run. Which of the following is TRUE about the Fed's policy response? Inflation rate, LRAS SRAS ADS AD4 ► AD; AD2 AD, 3% Real growth O The Fed provided just the right amount of response to the shock. The Fed responded too much to the shock. O The Fed was too fast in responding to the shock. O The Fed responded too litle to the shock.

Question 7 Refer to the figure. In the figure, assume the initial real growth rate of the economy is 3 percent when a negative aggregate demand shock shifts the AD curve from AD, to AD,. As a result of the Fed's policy response, the AD curve shifts to AD2 in the short run. Which of the following is TRUE about the Fed's policy response? Inflation rate, LRAS SRAS ADS AD4 ► AD; AD2 AD, 3% Real growth O The Fed provided just the right amount of response to the shock. The Fed responded too much to the shock. O The Fed was too fast in responding to the shock. O The Fed responded too litle to the shock.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter14: Money And The Economy

Section: Chapter Questions

Problem 3WNG

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