Use the figure below to answer the following questions.

Figure 26.3.3
-Refer to Figure 26.3.3.In which of the graphs would we predict that eventually the price level will rise and real GDP will fall,all else remaining the same?
A)(a)only
B)(d)only
C)(b)only
D)(c)and (d)
E)(c)only

Question

Use the figure below to answer the following questions.
  
Figure 26.3.3
-Refer to Figure 26.3.3.In which of the graphs would we predict that eventually the price level will rise and real GDP will fall,all else remaining the same?
A)(a)only 
B)(d)only 
C)(b)only 
D)(c)and (d) 
E)(c)only

Quizplus · Accepted Answer

Graphs (c) and (d) both show a vertical Phillips curve, indicating that there is no trade-off between inflation and unemployment. This means that any increase in inflation will not lead to a decrease in unemployment, and instead will lead to a decrease in real GDP. Therefore, we would predict that eventually the price level will rise and real GDP will fall in graphs (c) and (d).

Use the Figure Below to Answer the Following Questions