Suppose That Wages and Prices Are Quite Flexible,so That the Short-Run

Multiple Choice

Suppose that wages and prices are quite flexible,so that the short-run aggregate supply curve is steep.In that case,________.

A) policies to stabilize inflation are probably needed more than policies to stabilize economic activity
B) supply shocks will destabilize inflation,but have minimal impact on output
C) demand shocks will destabilize output,but have minimal impact on inflation
D) all of the above
E) none of the above