Answer to Question #135082 in Macroeconomics for December

Question

If inflation accelerates due to the increase in the price of oil (an import), the best policy to combat
such inflation in a country with a high unemployment rate, would be to...
[1] apply the supply-side policy that will increase aggregate supply, which will be illustrated by
a rightward shift of the AS curve.
[2] respond with demand management policy that will increase aggregate demand, which will
be illustrated by a rightward shift of the AD curve.
[3] implement contractionary monetary policy, illustrated by the rightward shift of the AD
curve.
[4] apply incomes policy, illustrated by a leftward shift of the AS curve.

Answer 1

[3] implement contractionary monetary policy, illustrated by the rightward shift of the AD

curve.