Refer to the following figure when answering the following questions.
Figure 12.4: Phillips Curve
-Consider the Phillips curve in Figure 12.4. At point a, the economy is ________; at point c, the economy is ________.
A) in recession; booming
B) in recession; in recession
C) in recession; in its long-run equilibrium
D) booming; in recession
E) in its long-run equilibrium; in recession

Question

Refer to the following figure when answering the following questions.
Figure 12.4: Phillips Curve 
-Consider the Phillips curve in Figure 12.4. At point a, the economy is ________; at point c, the economy is ________.
A) in recession; booming 
B) in recession; in recession 
C) in recession; in its long-run equilibrium 
D) booming; in recession 
E) in its long-run equilibrium; in recession

Quizplus · Accepted Answer

At point a, the economy is in recession because the unemployment rate is high and the inflation rate is low. At point c, the economy is in its long-run equilibrium because the unemployment rate and the inflation rate are both at their natural rates.

Refer to the Following Figure When Answering the Following Questions