If aggregate demand increases, thereby leading to an increase in real GDP and inflation, there is
A) a leftward shift in the short-run Phillips curve.
B) a movement downward along the short-run Phillips curve.
C) a movement upward along the short-run Phillips curve.
D) a rightward shift in the short-run Phillips curve.
E) neither a movement along nor a shift in the short-run Phillips curve.
C
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Refer to Figure 15-14. In the figure above, suppose the economy in Year 1 is at point A and is expected in Year 2 to be at point B. Which of the following policies could the Federal Reserve use to move the economy to point C?
A) increase the required-reserve ratio B) sell Treasury bills C) decrease income taxes D) buy Treasury bills