Figure 14.1 -Refer to Figure 14.1.Assume That the Economy Is Originally in Economy

Multiple Choice

Figure 14.1

-Refer to Figure 14.1.Assume that the economy is originally in equilibrium where real GDP equals potential GDP.Other things equal,an increase in the target inflation rate would best be represented as a movement from ________ in the short run and ________ in the long run.

A) point Y to point X; point X to point Y
B) point Y to point X; will remain at point X
C) point Y to point Z; remain at point Z
D) point Z to point X; point X to point Z