Refer to the graph shown. Suppose an economy begins at point B but then adopts a contractionary monetary policy. In the short run, this policy would most likely:
A)reduce inflation to 3 percent and raise unemployment to 7.5 percent.
B)reduce inflation to 3 percent and reduce unemployment to 4 percent.
C)raise inflation to 9 percent and raise unemployment to 7.5 percent.
D)raise inflation to 9 percent and reduce unemployment to 4 percent.

Question

Refer to the graph shown. Suppose an economy begins at point B but then adopts a contractionary monetary policy. In the short run, this policy would most likely: 
A)reduce inflation to 3 percent and raise unemployment to 7.5 percent. 
B)reduce inflation to 3 percent and reduce unemployment to 4 percent. 
C)raise inflation to 9 percent and raise unemployment to 7.5 percent. 
D)raise inflation to 9 percent and reduce unemployment to 4 percent.

Quizplus · Accepted Answer

The Answer of Refer to the graph shown. Suppose an economy begins at point B but then adopts a contractionary monetary policy. In the short run, this policy would most likely: 
A)reduce inflation to 3 percent and raise unemployment to 7.5 percent. 
B)reduce inflation to 3 percent and reduce unemployment to 4 percent. 
C)raise inflation to 9 percent and raise unemployment to 7.5 percent. 
D)raise inflation to 9 percent and reduce unemployment to 4 percent.

Refer to the Graph Shown