Figure 12.3 -Refer to Figure 12.3.Suppose That After a Negative Supply Shock,the

question 82

Multiple Choice

Figure 12.3

-Refer to Figure 12.3.Suppose that after a negative supply shock,the economy is at point X in the IS-MP model and at point B on the Phillips curve.If the Bank of Canada has a goal of high employment and therefore does not adjust interest rates,the economy would ________ in the IS-MP model and ________ on the Phillips curve.

• A) remain at point X; move to point C
• B) remain at point X; remain at point B
• C) move to point Z; move to point A
• D) move to point Z; move to point C

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