In rhich of the following cases would an increase in inflationary expectations have the greatest
short-term effect on Y? Hints: Although this question contains numbers, calculations are unnecessary. Think about the
slope of the AD curve.
A© Slope of monetary rule curve is 1, spending mu'tiplier is 2.5, and a 1-point change in R shifts the spending
curve by 100.
B© Slope of monetary rule curve is 0.5, spending multiplier is 5, and a 1-point change in R shifts the spending
curve by 100.
C© Slope of monetary rule curve is 1, spending multiplier is 5, and a 1-point change in R shifts the spending
curve by 100.
D© Slope of monetary rule curve is 1, spending multiplier is 5, and a 1-point change in R shifts the spending
curve by 50,