Figure 35-8 Use This Graph to Answer the Questions Below

Multiple Choice

Figure 35-8
Use this graph to answer the questions below.
-Refer to figure 35-8.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.