The three figures below show the phases of a disinflation. In part (i), the economy is experiencing a sustained inflation at E, (iii) Phase 3 (ii) Phase 2 (i) Phase 1 AS3 AS2 AS AS2 P. AS2 EA P E3 AD2 AS1 P2 ..... AD, E AD, AD1 Real National Income (GDP) Real National Income (GDP) Real National Income (GDP) The upward movement along the AD, curve in Phase 1 is normally caused by O A. inflationary expectations that cause wages to continue rising. O B. tightening monetary policy by raising interest rates. O C. workers accepting a reduction in their wages. O D. an increase in the productivity of workers. O E. an increase in the NAIRU. Price Level

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