Question 23

Refer to the graphs below. The first graph shows the money market of an economy, and the second graph shows the market for goods and services in the economy. 23 Mis; Misa M 53 X Investment 12 demand 10 Interest rate (%) Interest rate points 4 Skipped .Dm $75 150 225 $50 100 150 Amount of money Investment demanded and supplied eBook AS Print P1 A ADI (I=150) References P2 AD2 (I= 100) P3 AD3 (I=50) Q3 In the above diagrams, the numbers in the parentheses after the AD1, AD2, and ADg labels indicate the levels of investment spending associated with each AD curve. All figures are in billions. Of is the full-employment level of real output. The interest rate in the economy is 4 percent. Which of the following should the monetary authorities do to achieve a non-inflationary full-employment level of real GDP?"' 1" All) (Iii-l!) :23 '33 it .3, '2' Ii'i the above diagrams, the numbers in the parentheses after the AD1, ADZ, and A03 labels indicate the levels ofihvestmeht spending associated with each AD curve. All gures are in billions. Of is the fulleemployment level of real output. The interest rate in the economy is 4 percent. Which of the following should the monetary authorities do to achieve a noneihflationary - 10 poms fuilremploymerit level of real GDP? Skipped Multiple Choice E 0 They should decrease the money supply from $225 billion to $150 billion. References They should increase the money supply by$200 billion. 0 They should increase the money supply from $75 billion to $225 billion 0 They should decrease the money supply by $150 billion