Use the figure below to answer the following questions.
Figure 8.5.2
-Refer to Figure 8.5.2.Which one of the following best shows the effect of a decrease in real GDP?
A)A movement from A to E
B)A movement from B to C
C)A movement from E to A
D)A movement from A to C
E)A movement from A to B

Question

Use the figure below to answer the following questions.
  Figure 8.5.2
-Refer to Figure 8.5.2.Which one of the following best shows the effect of a decrease in real GDP?
A)A movement from A to E 
B)A movement from B to C 
C)A movement from E to A 
D)A movement from A to C 
E)A movement from A to B

Quizplus · Accepted Answer

A decrease in real GDP would result in a movement from point E to point A along the short-run Phillips curve. This is because at lower levels of output, there would be less demand for labor and therefore less upward pressure on wages and prices.

Use the Figure Below to Answer the Following Questions