Figure 13.1 -If the Economy Is at Point 1 in Figure 13.1

Multiple Choice

Figure 13.1
-If the economy is at point 1 in Figure 13.1 and the central bank issues a credible statement that it can and will cause inflation to rise,what happens next?

A) the economy moves to point 2
B) the economy remains at point 1
C) the economy moves to the left along the AS curve
D) the AS curve shifts down,causing both output and inflation to decline
E) the AS curve shifts up,causing both output and inflation to rise