Advanced Placement (AP), 26.03.2020 21:09 elijah4723

The diagram shows an economy’s long-run aggregate supply (LRAS)(LRAS), short-run aggregate supply (SRAS)(SRAS), and aggregate demand (AD)(AD). Assume the country’s economy is currently at short-run equilibrium. Which of the following is a monetary policy action the country’s central bank can use to restore full employment, and what is the consequent effect on the value of the country’s currency in foreign exchange markets?

A decrease in the money supply, which will cause currency depreciation.
A

A decrease in the discount rate, which will cause currency appreciation.
B

An increase in the required reserve ratio, which will cause currency appreciation.
C

An open market sale of government bonds, which will cause currency appreciation.
D

An open market purchase of government bonds, which will cause currency depreciation.

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The diagram shows an economy’s long-run aggregate supply (LRAS)(LRAS), short-run aggregate supply (S...

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