Refer to the Diagram and Assume the Economy Is Initially $b _ { 1 } \text {. Point } c _ { 1 }$

Multiple Choice

Refer to the diagram and assume the economy is initially at point $b _ { 1 } \text {. Point } c _ { 1 }$ represents

A) a stable position because reality and expectations are consistent.
B) a stable position because full employment and a constant annual in?ation rate are represented.
C) an unstable situation because government will undertake contractionary policies.
D) an unstable situation because nominal wage rates will increase.