(Figure: Demand Shock A) When the economy moves from A to B, as shown in the graph on the left, how will inflation and the unemployment rate be affected, as shown in the graph on the right?

A) There will be movement on the curve, so that inflation increases and unemployment decreases.
B) There will be movement on the curve, so that inflation decreases and unemployment increases.
C) The curve will shift left, so that both unemployment and inflation decrease.
D) The curve will shift right, so that both unemployment and inflation increase.

Question

(Figure: Demand Shock A) When the economy moves from A to B, as shown in the graph on the left, how will inflation and the unemployment rate be affected, as shown in the graph on the right?
 
A) There will be movement on the curve, so that inflation increases and unemployment decreases. 
B) There will be movement on the curve, so that inflation decreases and unemployment increases. 
C) The curve will shift left, so that both unemployment and inflation decrease. 
D) The curve will shift right, so that both unemployment and inflation increase.

Quizplus · Accepted Answer

The Answer of (Figure: Demand Shock A) When the economy moves from A to B, as shown in the graph on the left, how will inflation and the unemployment rate be affected, as shown in the graph on the right?
 
A) There will be movement on the curve, so that inflation increases and unemployment decreases. 
B) There will be movement on the curve, so that inflation decreases and unemployment increases. 
C) The curve will shift left, so that both unemployment and inflation decrease. 
D) The curve will shift right, so that both unemployment and inflation increase.

(Figure: Demand Shock A) When the Economy Moves from a to B