level Price P3 P₂ P₁ 0 1 1 1 1 1 1 I 1 M 1 I MI I O I I ASLA 7 AS2 AS₁ d C Real output AD2 AD₁ Refer to the above diagram. Assume the initial aggregate demand curve is AD2 and the initial aggregate supply curve is AS2. If the economy is at point b, what type of macroeconomic policy is called for: O expansionary fiscal policy and/or expansionary monetary policy. O contractionary fiscal policy but expansionary monetary policy. O expansionary fiscal policy but contractionary monetary policy. O contractionary fiscal policy and/or contractionary monetary policy.

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