-In the above figure, suppose that the economy currently is at point A. If the inflation rate rises and this rise is NOT anticipated by the public, the economy moves to a point such as point
A) D.
B) E.
C) B.
D) C.

Question

-In the above figure, suppose that the economy currently is at point A. If the inflation rate rises and this rise is NOT anticipated by the public, the economy moves to a point such as point
A) D. 
B) E. 
C) B. 
D) C.

Quizplus · Accepted Answer

If the inflation rate rises unexpectedly, the economy moves to a point like B, where output increases temporarily due to lower real wages, leading to higher employment and production.

-In the Above Figure, Suppose That the Economy Currently Is