Figure 13.1 -If the Economy Is at Point 1 in Figure 13.1

question 4

Multiple Choice

Figure 13.1
-If the economy is at point 1 in Figure 13.1 and the central bank issues a credible statement that it can and will cause inflation to rise,what happens next?

• A)the economy moves to point 2
• B)the economy remains at point 1
• C)the economy moves to the left along the AS curve
• D)the AS curve shifts down,causing both output and inflation to decline
• E)the AS curve shifts up,causing both output and inflation to rise