FIGURE 29-2 Refer to Figure 29-2

Multiple Choice

FIGURE 29-2 Refer to Figure 29-2.The movement of the economy from E₁ to E₂ was likely caused by

A) an increase in the price level.
B) a positive supply shock induced by new technology.
C) a negative demand shock due to government cut-backs.
D) a negative supply shock due to a rise in input prices.
E) the monetary validation of an initial demand shock by the central bank,combined with ongoing inflation expectations.