The Three Figures Below Show the Phases of a Disinflation

question 89

Multiple Choice

The three figures below show the phases of a disinflation.In part (i) ,the economy is experiencing a sustained inflation at E₁. FIGURE 29-4 Refer to Figure 29-4,part (ii) .If the AS curve continues to drift upward during Phase 2 of the disinflation process,the economy will experience

• A)falling unemployment and rising output.
• B)falling real wages and factor prices and falling unemployment.
• C)rising real wages and factor prices and rising employment.
• D)rising unemployment and falling output.
• E)a falling price level and falling output.

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