Figure 26-12 -Refer to Figure 26-12. in the Dynamic AD-AS Model, the AD-AS

Multiple Choice

Figure 26-12
-Refer to Figure 26-12. In the dynamic AD-AS model, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in

A) unemployment rates higher than what would occur if no policy had been pursued.
B) inflation rates higher than what would occur if no policy had been pursued.
C) potential real GDP levels lower than what would occur if no policy had been pursued.
D) real GDP levels higher than what would occur if no policy had been pursued.