The Three Figures Below Show the Phases of a Disinflation

Multiple Choice

The three figures below show the phases of a disinflation.In part (i) ,the economy is experiencing a sustained inflation at E₁. FIGURE 29-4 Refer to Figure 29-4,part (ii) or (iii) .A movement of the economy from E₃ to E₂ could be due to

A) a slow fall in wages due to the recessionary gap.
B) an expansionary monetary policy.
C) a contractionary monetary policy.
D) a rise in unit costs caused by falling wages.
E) a positive aggregate demand shock.