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Refer to the Accompanying Figure

Question 105

Multiple Choice

Refer to the accompanying figure. Refer to the accompanying figure. Starting from long-run equilibrium at point C, a favorable inflation shock that decreases 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; recessionary D) B; expansionary Starting from long-run equilibrium at point C, a favorable inflation shock that decreases 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; recessionary
D) B; expansionary

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