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-Refer to the Above Diagram and Assume the Economy Is

Question 64

Multiple Choice

  -Refer to the above diagram and assume the economy is initially at point b<sub>1</sub>.If workers fully anticipate price level increases and government uses expansionary policies to lower the unemployment rate below 6 percent,the economy will: A)  move from B<sub>1</sub> to C<sub>1</sub>,at which point macroeconomic policies will cease to be effective. B)  remain at B<sub>1</sub>. C)  follow the path indicated by B<sub>1</sub>,B<sub>2</sub>,B<sub>3</sub>,and B<sub>4</sub>. D)  follow the path indicated by B<sub>1</sub>,C<sub>1</sub>,B<sub>2</sub>,C<sub>2</sub>,B<sub>3</sub>,etc.
-Refer to the above diagram and assume the economy is initially at point b1.If workers fully anticipate price level increases and government uses expansionary policies to lower the unemployment rate below 6 percent,the economy will:


A) move from B1 to C1,at which point macroeconomic policies will cease to be effective.
B) remain at B1.
C) follow the path indicated by B1,B2,B3,and B4.
D) follow the path indicated by B1,C1,B2,C2,B3,etc.

Correct Answer:

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