Figure 14.4 -Refer to Figure 14.4. Suppose the Economy Is Operating at Economy

Multiple Choice

Figure 14.4

-Refer to Figure 14.4. Suppose the economy is operating at point A, but the government increases spending because it believes that 6 percent unemployment is unacceptably high. If the adaptive expectations hypothesis holds, in the short run, the economy will move to:

A) point B.
B) point C.
C) point D.
D) point E.
E) point F.