Figure 17-6

-Figure 17-6 (b) illustrates that

Question

Figure 17-6
 
-Figure 17-6 (b) illustrates that

Quizplus · Accepted Answer

Option A and B are both correct based on the graph. In the short run, it is possible to reduce inflation by accepting a higher rate of unemployment (moving from point e to r) or reduce unemployment by stimulating aggregate demand (moving from point r to e). Option C is incorrect as the Phillips curve connecting points g, e, and r shows the different combinations of inflation and unemployment that occur at different time periods, and not policy choices. Therefore, Option D is the correct answer.

Figure 17-6 -Figure 17-6 (B) Illustrates That