Multiple Choice
Figure 22-7
Use this graph to answer the questions below. 
-Refer to figure 22-7. If the economy starts at 5% unemployment and 5% inflation then if the Federal Reserve pursues a contractionary monetary policy, in the short run the economy moves to
A) 3% unemployment and 5% inflation. In the long run the economy moves to 5% unemployment and 5% inflation.
B) 3% unemployment and 5% inflation. In the long run the economy moves to 5% unemployment and 3% inflation.
C) 7% unemployment and 3% inflation. In the long run the economy moves to 5% unemployment and 5% inflation.
D) 7% unemployment and 3% inflation. In the long run the economy moves to 5% unemployment and 3% inflation.
Correct Answer:
Verified
Correct Answer:
Verified
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