In 2007, the Federal Reserve lowered interest rates in order to stimulate the
economy. Which of the following is a possible explanation as to why this policy failed
to restore the economy to long- run equilibrium
the cut in interest rates shifted the long run aggregate supply curve too far.
the cut in interest rates was accompanied by very loose fiscal policy
since monetary policy shifts the aggregate demand curve, it was not able to
deal with the aggregate supply issues that led to the Great Recession,
since monetary policy shifts the aggregate supply curve, it was not able to deal
with aggregate demand issues that led to the Great Recession.