Figure 12.1 -Refer to Figure 12.1..Suppose the Economy Is Initially at Full

Multiple Choice

Figure 12.1

-Refer to Figure 12.1..Suppose the economy is initially at full employment with real GDP equal to potential GDP,and the expected inflation rate equal to the actual inflation rate.If an economic shock causes the IS curve to shift from IS₁ to IS₂,this will

A) push the economy down the Phillips curve, raising the inflation rate.
B) push the economy up the Phillips curve, raising the inflation rate.
C) push the economy down the Phillips curve, lowering the inflation rate.
D) push the economy up the Phillips curve, lowering the inflation rate.