Figure 131 Alt Text for Figure 13

question 50

Multiple Choice

Figure 13.1 Alt text for Figure 13.1: In figure 13.1, a short-run Phillips curve.
Long description for Figure 13.1: The x-axis is labelled, unemployment rate percent, and the y-axis is labelled, inflation rate percent per year.A straight line labelled, Philips curve, begins at the top left corner and slopes down to the end of the x-axis.Point A is plotted half way along line Philips curve.Point B is plotted to the right of point A and point C is plotted is to the left of point A.Point D is plotted above this line, in the left center of the quadrant.Point E is plotted below this line, directly below point A.
-Refer to Figure 13.1.Suppose that the economy is currently at point A on the short-run Phillips curve in the figure above, and the unemployment rate at A is the natural rate.If the economy was to move to point B, which of the following must be true?

• A)The economy is producing a level of GDP equal to potential GDP.
• B)Aggregate demand must have increased.
• C)Equilibrium GDP at point B must be below potential GDP.
• D)The Bank of Canada conducted expansionary policy to cause the move.
• E)The Bank of Canada purchased government securities to cause the move.

---

Definitions:

Absolute Right

A legal or moral right that is not subject to any limitations or conditions; it must be upheld under all circumstances.

Bankruptcy Case

A legal proceeding involving a person or business that is unable to repay outstanding debts, overseen by a court.

Dismissed

The termination of a legal case or the discharge of an individual from employment.

Credit Counseling

A professional service that assists individuals in managing their debt, improving their credit, and making sound financial decisions.