The Figure Given Below Represents the New Classical Long Run

question 94

Multiple Choice

The figure given below represents the new classical long run and short run Phillips curve measuring inflation rate on vertical axis and unemployment rate on horizontal axis.
Figure 15.2

-Refer to Figure 15.2. Assume that the economy is now at point B. If government officials announce and carry out a policy that will maintain the inflation rate at 15 percent, we would expect:

• A) the economy to move to point A.
• B) the economy to remain at point B.
• C) the economy to move to point C.
• D) the economy to move to point D.
• E) the economy to move to point E.