Figure 16-6 -Refer to Figure 16-6.Suppose the Economy Was Operating at Point

Multiple Choice

Figure 16-6

-Refer to Figure 16-6.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 the

A) expansionary phase to the recovery phase of the inflation-unemployment cycle.
B) Phillips phase to the stagflation phase of the inflation-unemployment cycle.
C) Phillips phase to the recovery phase of the inflation-unemployment cycle.
D) stagflation phase to the recovery phase of the inflation-unemployment cycle.