-In the above figure,the economy is at point A.An increase in oil prices occurs after which the Fed responds by increasing the quantity of money.The economy moves from point A to

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An increase in oil prices typically causes a supply shock, leading to higher inflation and lower output, moving the economy from point A to point D. The Fed's response by increasing the quantity of money aims to boost demand, moving the economy from point D to point C.

-In the Above Figure,the Economy Is at Point A