Figure 33-11. -Refer to Figure 33-11.A movement from P₁ and Y₂,to P₂ and Y₁ would be consistent with A)a decrease in consumption expenditures. B)stagflation. C)sticky-wages. D)an increase in net exports.

Question

Quizplus · Accepted Answer

This movement represents a shift from the production of one good to another (specifically, from P₁ to P₂ and from Y₂ to Y₁). If this shift results in both higher prices (due to decreased supply of the first good) and higher unemployment (due to decreased demand for the inputs used to produce the first good), it is consistent with stagflation.

Figure 33-11. -Refer to Figure 33-11.A Movement from P1 and Y2,to P2

Figure 33-11. -Refer to Figure 33-11.A Movement from P₁ and Y₂,to P₂