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Refer to the Accompanying Figure

Question 97

Multiple Choice

Refer to the accompanying figure. Refer to the accompanying figure. Starting from long-run equilibrium at point C, an adverse inflation shock that increases inflation from π to π¹ will lead to a short-run equilibrium at point ________ creating ________ gap. A) A; an expansionary B) A; a recessionary C) B; a recessionary D) B; an expansionary Starting from long-run equilibrium at point C, an adverse inflation shock that increases inflation from π to π¹ will lead to a short-run equilibrium at point ________ creating ________ gap.


A) A; an expansionary
B) A; a recessionary
C) B; a recessionary
D) B; an expansionary

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