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-Refer to Exhibit 16-11

Question 83

Multiple Choice

-Refer to Exhibit 16-11.Assume that the starting point is point 1.Suppose that there is a supply-side change capable of reducing the capacity of the economy to produce.Which of the following best goes with the diagram shown? A) New classical theory with policy incorrectly anticipated,bias downward B) New classical theory with policy incorrectly anticipated,bias upward C) Real business cycle theory D) New classical theory with policy unanticipated E) Policy ineffectiveness proposition (PIP)
-Refer to Exhibit 16-11.Assume that the starting point is point 1.Suppose that there is a supply-side change capable of reducing the capacity of the economy to produce.Which of the following best goes with the diagram shown?


A) New classical theory with policy incorrectly anticipated,bias downward
B) New classical theory with policy incorrectly anticipated,bias upward
C) Real business cycle theory
D) New classical theory with policy unanticipated
E) Policy ineffectiveness proposition (PIP)

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