Refer to the Following Figure When Answering

Multiple Choice

Refer to the following figure when answering
Figure 12.2: IS-MP Curve
-Consider the economy presented in Figure 12.2. If the stock market drops sharply, there is a loss in consumer and investor confidence and the economy moves from ________. To prevent a ________, the Fed ________, and the economy moves from ________.

A) point a to d; recession; lowers interest rates; point d to b
B) point d to c; recession; lowers interest rates; point c to b
C) point c to b; bubble; raises interest rates; point b to c
D) point a to d; recession; lowers interest rates; point d to c
E) Not enough information is given.