-Refer to Exhibit 16-6

Multiple Choice

-Refer to Exhibit 16-6.The economy is initially at point B.There is an unanticipated increase in aggregate demand,prices and wages are flexible,the economy is self-regulating,and people hold adaptive expectations.In the short run the economy will move to point __________ and in the long run the economy will be at point __________.

A) F; C
B) F; D
C) E; B
D) E; C
E) E; A