Figure 14.2 -Refer to Figure 14.2.Other things equal,a decrease in inflationary expectations would best be represented by a movement from A) point A to point B. B) point B to point A. C) point C to point B. D) point B to point C.

Question

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A decrease in inflationary expectations means that people expect inflation to be lower in the future. This would lead to a decrease in the expected rate of inflation, which is represented by a movement from point A to point B.

Figure 14.2 -Refer to Figure 14.2.Other Things Equal,a Decrease in Inflationary Expectations