If resource prices are sticky downward and a recessionary gap develops, the short-run aggregate supply curve will:
a. shift leftward to return the economy to its potential output.
b. shift rightward to return the economy to its potential output.
c. become a horizontal straight line.
d. not shift rightward to return the economy to its potential output.
e. become the long-run aggregate supply curve.
Question 2
Which of the following is an example of a contractionary monetary policy?
a. Reduction in the amount of transfer payments made to poor families
b. Purchase of U.S. government securities in the open market
c. Increase in the discount rate
d. Decrease in the required reserve ratio
e. Increase in the tax rate
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