The Figure Given Below Represents the Short Run and Long

question 73

Multiple Choice

The figure given below represents the short run and long run Phillips curve.
Figure 14.4

-Refer to Figure 14.4. Suppose the economy is located at point A, but the government increases spending because it believes that 6 percent unemployment is unacceptably high. If the adaptive expectations hypothesis holds, in the short run, the economy will move to:

• A) point B.
• B) point C.
• C) point D.
• D) point E.
• E) point F.