The Figure Given Below Represents the Short Run and Long

question 76

Multiple Choice

The figure given below represents the short run and long run Phillips curve. Figure 14.4 Refer to Figure 14.4.If the adaptive expectations hypothesis holds, and the economy moves from point C to point D because of expansionary fiscal policy, what rate of inflation are people expecting at point D?

• A)2 percent
• B)4 percent
• C)6 percent
• D)8 percent
• E)10 percent

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