Figure 17-8

question 69

Multiple Choice

Figure 17-8. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate."

-Refer to Figure 17-8. Faced with the shift of the Phillips curve from PC₁ to PC₂, policymakers will

• A) ask whether the shift is temporary or permanent.
• B) be concerned with how people adjust their expectations of inflation as a result of the shift.
• C) face, as well, a decision as to whether to accommodate the shock.
• D) All of the above are correct.

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Definitions:

Carboniferous

A geologic period and system that occurred around 359 to 299 million years ago, known for its vast swamp forests and the formation of significant coal deposits.

Ordovician

A geological period, approximately 485 to 444 million years ago, marked by significant diversification of life, especially in marine environments.

Cretaceous

A geological period from about 145 to 66 million years ago, known for the dominance of dinosaurs and ending with their mass extinction.

Pleistocene

The geological epoch lasting from about 2.6 million to 11,700 years ago, characterized by the last period of significant ice ages.