Figure 35-4 -Refer to Figure 35-4.If the Economy Starts at 5% Unemployment

Figure 35-4

-Refer to figure 35-4.If the economy starts at 5% unemployment and 5% inflation then if the Federal Reserve pursues a contractionary monetary policy,in the short run the economy moves to

A) 3% unemployment and 5% inflation.In the long run the economy moves to 5% unemployment and 5% inflation.
B) 3% unemployment and 5% inflation.In the long run the economy moves to 5% unemployment and 3% inflation.
C) 7% unemployment and 3% inflation.In the long run the economy moves to 5% unemployment and 5% inflation.
D) 7% unemployment and 3% inflation.In the long run the economy moves to 5% unemployment and 3% inflation.