Ask Question
BusinessBusiness
12 May, 14:49

Refer to the diagrams. The numbers in parentheses after the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve. All figures are in billions. If aggregate demand is AD3 and the monetary authorities desire to reduce it to AD2, they should

+2
Answers (2)
  1. 12 May, 16:11
    0
    Contractionary monetary policy is a type of economic policy that is been design to combat inflation which has to do with decreasing the supply money so that there will be an increase in the cost of borrowing which in turn make the GDP to decreases and inflations become dampens. The central bank and other monetary authorities reduces aggregate demand to AD2 from AD2 that it was, in turn, money in supply will decreases to $100 from that it was $120. This reduction will make a decrease in the way consumer spend. There will be a decrease in prices of commodities and output produced
  2. 12 May, 16:22
    0
    Decrease the money supply from $120 to $100

    Explanation:

    If the monetary authorities reduces aggregate demand from AD3 to AD2, money supply decreases from $120 to $100. This decrease will cause a decrease in consumer spending. There will be a reduction of price levels and real output.

    This is also called contractionary monetary policy and it causes interest rate to be higher there by reducing investments.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Refer to the diagrams. The numbers in parentheses after the AD1, AD2, and AD3 labels indicate the levels of investment spending associated ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Owns taxi (automobile) worth $1,315 A. Asset C. Both B. Liability D. Neither
Answers (1)
The current price of the common stock of Internet Enterprises is $100. Over the course of a year, the stock's price will either increase by 100% or decrease by 50%. The stock pays no dividends.
Answers (1)
Using the cut-and-try method for aggregate operations planning, we can calculate the ending inventory and then calculate the safety stock as a percent of forecast demand.
Answers (1)
When a set of financial statements is prepared using the cash basis or the modified cash basis of accounting, which one of the following is least likely to be an appropriate financial statement title? A.
Answers (1)
The price of a non-dividend paying stock is $19 and the price of a three-month European call option on the stock with a strike price of $20 is $1. The risk-free rate is 4% per annum.
Answers (1)
New Questions in Business
Jean, a restaurant critic, publishes a review in a national daily that the sandwiches served at his friend's deli are usually not fresh. Tom, the owner of the deli, notices a significant decrease in customers after the review gets published.
Answers (1)
Why did the Soviet Union experience many surpluses and shortfalls? A) The labor force wasn't well educated B) The cold climate made farming hard C) Central planners could not manage every detail D) The country depended on imports to obtain resources.
Answers (1)
A hospitality operation has sales revenue of $462,000 with variable cost averaging 44%. Fixed costs are $188,000. The owner wants a net income after tax of $50,400 based on a tax rate of 28%. a.
Answers (1)
True or false fdr was eager to use deficit spending to end the economic crisis.
Answers (1)
If supply increases while demand decreases A. the equilibrium quantity will definitely increase. B. the equilibrium price will definitely decrease. C. the equilibrium quantity will definitely decrease. D.
Answers (1)
Home » Business » Refer to the diagrams. The numbers in parentheses after the AD1, AD2, and AD3 labels indicate the levels of investment spending associated with each curve. All figures are in billions.
Sign Up Forgot Password?