Figure 16-2
-Refer to Figure 16-2. If the economy starts at c and the money supply growth rate increases, where does the economy move to in the long run?

Name: Figure 16-2 -Refer to Figure 16-2. If the economy starts at c and the money supply growth rate increases, where does the economy move to in the long run?
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Question

Figure 16-2 
-Refer to Figure 16-2. If the economy starts at c and the money supply growth rate increases, where does the economy move to in the long run?

Quizplus · Accepted Answer

In the long run, an increase in the money supply growth rate typically leads to higher inflation, moving the economy to a point like e, where the inflation rate is higher.

Figure 16-2 -Refer to Figure 16-2. If the Economy Starts at C