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

question 50

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 fourth quarter of 1997 (1997.4) . Given the information you have, using the Phillips curve, to stabilize the economy you would ________ interest rates, risking ________.

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