Figure 22-1. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, U represents the unemployment rate.
-Refer to Figure 22-1. The curve that is depicted on the right-hand graph offers policymakers a "menu" of combinations
A)that applies both in the short run and in the long run.
B)that is relevant to choices involving fiscal policy, but not to choices involving monetary policy.
C)of inflation and unemployment.
D)All of the above are correct.

Question

Figure 22-1. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, U represents the unemployment rate. 
-Refer to Figure 22-1. The curve that is depicted on the right-hand graph offers policymakers a "menu" of combinations
A)that applies both in the short run and in the long run. 
B)that is relevant to choices involving fiscal policy, but not to choices involving monetary policy. 
C)of inflation and unemployment. 
D)All of the above are correct.

Quizplus · Accepted Answer

The right-hand graph shows a menu of combinations of inflation and unemployment, which policymakers can use to make decisions about macroeconomic policy. This menu is relevant to both fiscal and monetary policy decisions, and applies to both the short run and the long run. Therefore, choice C is the best answer.