The figure given below depicts the long run equilibrium in an economy. Figure 14.1 In the figure:
AD1 and AD2: Aggregate demand curves
AS1 and AS2: Aggregate supply curves
Refer to Figure 14.1.The movement from point A to point B to point C results in:
A) a constant price level and a decline in the natural rate of unemployment.
B) a rightward shift of the short-run Phillips curve.
C) a lower price level and no change in the natural rate of unemployment.
D) a movement up the short-run Phillips curve.
E) a lower price level and a decline in the natural rate of unemployment.
Correct Answer:
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