Figure 35-9

Multiple Choice

Figure 35-9. The left-hand graph shows a short-run aggregate-supply SRAS) curve and two aggregate-demand AD) curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate."
-Refer to Figure 35-9. Faced with the shift of the Phillips curve from PC1 to PC2, policymakers will

A) ask whether the shift is temporary or permanent.
B) be concerned with how people adjust their expectations of inflation as a result of the shift.
C) face, as well, a decision as to whether to accommodate the shock.
D) All of the above are correct.