Figure 11.2 -Refer to Figure 11.2..Assume the Economy Is in Equilibrium at Is

Multiple Choice

Figure 11.2

-Refer to Figure 11.2..Assume the economy is in equilibrium at Ȳ₁,where real GDP equals potential GDP.The economy experiences a negative demand shock,and the Bank of Canada responds by decreasing real interest rates to bring real GDP and inflation back to their original levels.Other things equal,the Bank of Canada's response following the negative demand shock is best represented by a(n)

A) movement up along the Phillips curve.
B) movement down along the Phillips curve.
C) upward shift of the Phillips curve.
D) downward shift of the Phillips curve.