-Refer to Exhibit 16-11

question 83

Multiple Choice

-Refer to Exhibit 16-11.Assume that the starting point is point 1.Suppose that there is a supply-side change capable of reducing the capacity of the economy to produce.Which of the following best goes with the diagram shown?

• A) New classical theory with policy incorrectly anticipated,bias downward
• B) New classical theory with policy incorrectly anticipated,bias upward
• C) Real business cycle theory
• D) New classical theory with policy unanticipated
• E) Policy ineffectiveness proposition (PI

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