If the economy is producing an equilibrium real output that is less than potential output, a(n):

Question

BlackTom AI · Accepted Answer

The question asks: If the economy is producing an equilibrium real output that is less than potential output, a(n):

Option 1: 'contractionary monetary policy could be used to decrease aggregate demand and decrease the general price level.' This would further reduce aggregate demand, which is counterproductive when output is already below potential. In a recessionary gap, contractionary policy tightens conditions, lowering demand and typically the price level, worsening unemployment rather than helping return to potential.

Option 2: 'expansionary monetary policy could be used to decrease aggregate demand and decrease the general price level.' This is internally inconsistent: expansionary policy aims to raise, not decrease, aggregate demand. Decreasing AD would not help close a recessionary gap, and the stated outcome (lower price level) would also be unlikely under expansionary policy which tends to raise prices or at least not push them down.

Option 3: 'expansionary monetary policy could be used to increase aggregate demand and increase the general price level.' This aligns with standard macroeconomic reasoning: when output is below potential, policymakers typically use expansionary monetary policy (e.g., lower interest rates, asset purchases) to shift AD right, boosting real output toward potential and often pushing the price level up as demand strengthens. The combination of higher AD and a higher price level is consistent with closing a recessionary gap in the short run.

Option 4: 'contractionary monetary policy could be used to increase aggregate demand and increase the general price level.' Contractionary policy reduces aggregate demand, not increases it, so this option contains a clear contradiction. It also mismatches the goal of raising output when operating below potential.

In sum, only Option 3 correctly identifies both the policy direction (expansionary) and the anticipated effects (higher AD and a higher price level) appropriate for an economy with output below potential.

If the economy is producing an equilibrium real output that is less than potential output, a(n):单项选择题

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