-Refer to Figure 13

-Refer to Figure 13.3 The diagram shows that if &61552;₀ is the central bank's inflation target an increase in potential output calls for:

A) monetary stimulus through lower interest rates and higher money supply growth.
B) higher wage rates to cover the increased cost of living.
C) monetary restraint through higher interest rates and lower money supply growth.
D) higher imports to provide the increase in long run supply.