(a) Moving diagonally toward Hyperinflation (from Point A to Point F in Figure 1

Question

(a) Moving diagonally toward Hyperinflation (from Point A to Point F in Figure 1), the CPI, the nominal GDP, and the real GDP would all increase.

(b) Moving diagonally toward Stagflation (from Point A to Point D in Figure 1), the CPI would increase,  the real GDP would increase, and the cyclical unemployment rate would also increase.

(c) Moving diagonally toward Depression (from Point A to Point B in Figure 1), the CPI would decrease, the nominal GDP would not change, and the labor force would decrease.

(d) Moving diagonally toward Cybernation (from Point A to Point H in Figure 1), the CPI would decrease, the real GDP would fall, and structural unemployment would decrease.

(e) Moving straight to the left (from Point A to Point C in Figure 1), the CPI, the unemployment rate, and the real GDP would all decrease.

Moving diagonally toward Hyperinflation (from Point A to Point F in Figure 1), the CPI, the nominal GDP, and the real GDP would all increase. Moving diagonally toward Stagflation (from Point A to Point D in Figure 1), the CPI would increase, the real GDP would increase, and the cyclical unemployment rate would also increase Moving diagonally toward Depression (from Point A to Point B in Figure 1), the CPI would decrease, the nominal GDP would not change, and the labor force would decrease. Moving diagonally toward Cybernation (from Point A to Point H in Figure 1), the CPI would decrease, the real GDP would fall, and structural unemployment would decrease. Moving straight to the left (from Point A to Point C in Figure 1), the CPI, the unemployment rate, and the real GDP would all decrease.

Explanation / Answer

(B) Is True

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