Refer to the Following Figure When Answering the Following Questions

question 50

Multiple Choice

Refer to the following figure when answering the following questions.
Figure 13.5: AS/AD Model
-Consider Figure 13.5. If the Fed sets a higher inflation target, under rational expectations, the economy moves from point ________ to point ________.

• A) a; c slowly
• B) a; c instantly
• C) a; d instantly
• D) b; d slowly
• E) b; c instantly