-Consider the IS-MP Model in Figure 14

Multiple Choice

-Consider the IS-MP model in Figure 14.2 above.Starting from the long-run equilibrium,the burst of the housing bubble and the appropriate fed response,with a risk premium,can be shown as a movement from point __________ to point __________ and the economy is in __________.

A) d;b;its long-run equilibrium
B) b;a;an expansion
C) d;f;a recession
D) d;c;its long-run equilibrium
E) e;f;a recession