Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions .
Exhibit: Aggregate Demand Shifts and Expectations
-(Exhibit: Aggregate Demand Shifts and Expectations) Suppose the economy was operating at point e in period 1. Expansionary fiscal and monetary policies adopted in period 1 resulted in a movement to point g in period 3. When workers and firms adjust their expectations in a higher price level and act on these expectations, the economy moves from a

A) expansionary phase to a recovery phase.
B) Phillips phase to a stagflation phase.
C) Phillips phase to a recovery phase.
D) stagflation phase to a recovery phase.