Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers allow the economy to adjust to the long run natural rate on its own, ?

People will raise their price expectations and aggregate demand will shift left

People will reduce their price expectations and the short run aggregate supply will shift right

People will raise their price expectations and the short run aggregate supply will shift left

People will reduce their price expectations and aggregate demand will shift right

Refers to Exhibit 4. Suppose the economy is operating in a recession

1.	Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers allow the economy to adjust to the long run natural rate on its own, ?
A.	People will reduce their price expectations and the short run aggregate supply will shift right
B.	People will raise their price expectations and aggregate demand will shift left
C.	People will raise their price expectations and the short run aggregate supply will shift left
D.	People will reduce their price expectations and aggregate demand will shift right
Answer» B. People will raise their price expectations and aggregate demand will shift left