Use the Following to Answer Questions

question 25

Multiple Choice

Use the following to answer questions
Figure: Negative Supply Shock
-(Figure: Negative Supply Shock) Refer to the figure.This economy initially begins at point A and a negative supply shock takes it to point Y.Taking the economy back to the LRAS curve would require:

• A) a monetary expansion of 21%.
• B) an inflation rate much greater than 16%.
• C) an inflation rate of 16%.
• D) an unemployment rate of -2%.

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