Figure 22-8

Multiple Choice

Figure 22-8. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate."
-Refer to Figure 22-8. Faced with the shift of the Phillips curve from PC₁ to PC₂, policymakers will

A) ask whether the shift is temporary or permanent.
B) be concerned with how people adjust their expectations of inflation as a result of the shift.
C) face, as well, a decision as to whether to accommodate the shock.
D) All of the above are correct.