Assume that because of a long policy lag, the government starts implementing expansionary monetary policy too late, i.e., at a time when the economy is already healing itself. As a result, the economy will probably move from an initialGroup of answer choicesrecessionary gap to an even deeper recessionary gap.a recessionary gap to an inflationary gap.inflationary gap to the natural level of Real GDP.inflationary gap to a recessionary gap.

Expansionary monetary policy involves:Question 23Select one:a.Decreasing money supply and increasing interest ratesb.Increasing money supply and decreasing interest ratesc.Decreasing both money supply and government expendituresd.Decreasing both the government spending and taxese.Decreasing both interest rates and taxes.

Monetary policy designed to slow down economic activity is called _____ monetary policy.A.expansionaryB.inflationaryC.contractionaryD.deflationary

The Federal Reserve would most likely adopt an expansionary monetary policy in which economic situation?A.The country has a high unemployment rate and slow economic growth.B.The country has a low unemployment rate and steady economic growth.C.The country has a high inflation rate and rapid economic growth.D.The country has a low inflation rate and strong economic growth.

In the AD-AS model(aggregate demand-aggregate supply), what is expected to happen if the government adopts expansionary fiscal policy while the central bank adopts contractionary monetary policy?A.Inflation rises in the short run，output falls in the long runB.Deflation rises in the short run, output rises in the long runC.Inflation rises in the short run, output rises in the long runD.Deflation rises in the short run, output falls in the long run

Starting from a long-run equilibrium, a reduction in potential output leads to _____ gap in the short run and to ___ rates of inflation in the long run.Group of answer choicesan expansionary; lowerno output; higheran expansionary; highera recessionary; higher