Refer to the Graph Shown

question 145

Multiple Choice

Refer to the graph shown. Suppose an economy begins at point B but then adopts an expansionary monetary policy. In the short run, this policy would most likely:

• A)reduce inflation to 3 percent and raise unemployment to 7.5 percent.
• B)reduce inflation to 3 percent and reduce unemployment to 4 percent.
• C)raise inflation to 9 percent and raise unemployment to 7.5 percent.
• D)raise inflation to 9 percent and reduce unemployment to 4 percent.

---

Definitions:

Consumption

The use of goods and services by households.

Silver Bells

Typically associated with a song or decoration, especially around Christmas time; not a standard economic term.

Garden Space

An area designated for cultivating plants, vegetables, or flowers, often for aesthetic, recreational, or food production purposes.

Utility Function

A mathematical representation that captures an individual's preference ordering for a set of goods and services.