Figure 34-7
-Refer to Figure 34-7. Which of the following is correct?
A) Unemployment rises as the economy moves from point a to point b.
B) Either fiscal or monetary policy could be used to move the economy from point b to point a.
C) If the economy is left alone, then as the economy moves from point b to long-run equilibrium, the price level will fall farther.
D) All of the above are correct

Question

Figure 34-7 
-Refer to Figure 34-7. Which of the following is correct?
A) Unemployment rises as the economy moves from point a to point b. 
B) Either fiscal or monetary policy could be used to move the economy from point b to point a. 
C) If the economy is left alone, then as the economy moves from point b to long-run equilibrium, the price level will fall farther. 
D) All of the above are correct

Quizplus · Accepted Answer

Option A is correct because as the economy moves from point a to point b, the output level decreases, and unemployment increases.
Option B is correct because both fiscal and monetary policy can be used to stimulate the economy and move it from point b to point a.
Option C is correct because the self-correcting mechanism will continue to operate until the economy reaches long-run equilibrium, and as a result, the price level will continue to decrease as the economy moves from point b to long-run equilibrium.

Figure 34-7 -Refer to Figure 34-7. Which of the Following Is Correct