Refer to Figure 12.2. Suppose the economy is initially above ...

[K@]

Refer to Figure 12.2. Suppose the economy is initially above potential GDP, and the actual inflation rate is greater than the expected inflation rate.
 
  If the Fed wants to achieve the goal of price stability, this would be represented by a movement on the Phillips curve from A) point A to point B.
  B) point C to point B.
  C) point B to point A.
  D) point A to point B to point C.

Question 2

The central bank in the New Keynesian model pursues a policy of
 
  A) fixed money supply.
  B) inflation between 2 and 3.
  C) zero inflation.
  D) targeting the market interest rate.

[kingfahad97]

Answer to Question 1

A

Answer to Question 2

D

[K@]

TYSM

[dantucker]

Gracias!