Refer to the Following Figure When Answering

Multiple Choice

Refer to the following figure when answering
Figure 13.4: AS/AD Model
-Use the aggregate supply/aggregate demand model in Figure 13.4 to answer the following scenario. In the 1990s, Japan experienced a prolonged sluggish economy. If the Bank of Japan targeted inflation, it would have responded to this situation by ________, pushing the economy from point ________ to point ________; eventually the economy would have returned to the steady state at point ________.

A) raising the inflation target rate; a; b; c
B) lowering the inflation target rate; a; b; c
C) raising the inflation target rate; a; d; c
D) lowering the inflation target rate; c; d; a
E) Not enough information is given.