Refer to the Graph Shown

question 38

Multiple Choice

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

• A)raise inflation to 9 percent but leave unemployment at 5.5 percent.
• B)lower inflation to 3 percent but leave unemployment at 5.5 percent.
• C)raise inflation to 9 percent but lower unemployment to 4 percent.
• D)lower inflation to 3 percent but raise unemployment to 7.5 percent.

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Definitions:

Trapped Gas

Trapped gas refers to gas that has been contained within another material, such as within rock formations or ice, which can be released under certain conditions.

Andesite

An intermediate-composition igneous rock that is the fine-grained equivalent of diorite; typically gray or greenish-gray, commonly with phenocrysts of cream-colored feldspar or dark amphibole.

Magma Chamber

A reservoir of molten rock beneath the surface of the Earth or a volcano.

Felsic Igneous Rock

Igneous rocks that are rich in silica and light in color, such as granite, characterized by minerals like quartz and feldspar.