Refer to the Following Figure When Answering
Figure $( \Delta \pi )$

question 98

Multiple Choice

Refer to the following figure when answering
Figure 12.9: Change in Inflation by Quarter (Source: Federal Reserve Economic Data, St. Louis Federal Reserve)
-Consider Figure 12.9, which shows the change in inflation $( \Delta \pi )$ from 1995 to 2000, by quarter. You are Federal Reserve chairman Greenspan and today's date is the first quarter of 1999 (1999.1) . Given the information you have, using the Phillips curve, to stabilize the economy you would ________ interest rates, risking ________.

• A) raise; inflation
• B) raise; recession
• C) lower; recession
• D) lower; higher unemployment
• E) Not enough information is given.

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