Figure 12.2 -Refer to Figure 12.2.Suppose the Economy Is Initially Above Potential

Multiple Choice

Figure 12.2

-Refer to Figure 12.2.Suppose the economy is initially above potential GDP,and the actual inflation rate is greater than the expected inflation rate.If the Bank of Canada wants to achieve the goal of price stability,this would be represented by a

A) shift from IS₁ to IS₂.
B) shift from IS₂ to IS₁.
C) shift from MP₁ to MP₂.
D) shift from MP₂ to MP₁.