Figure 35-6 Use This Graph to Answer the Questions Below

question 98

Multiple Choice

Figure 35-6
Use this graph to answer the questions below.
-Refer to figure 35-6.If the economy starts at 5% unemployment and 5% inflation then if the Federal Reserve pursues a contractionary monetary policy,in the short run the economy moves to

• A) 3% unemployment and 5% inflation.In the long run the economy moves to 5% unemployment and 5% inflation.
• B) 3% unemployment and 5% inflation.In the long run the economy moves to 5% unemployment and 3% inflation.
• C) 7% unemployment and 3% inflation.In the long run the economy moves to 5% unemployment and 5% inflation.
• D) 7% unemployment and 3% inflation.In the long run the economy moves to 5% unemployment and 3% inflation.