Figure 17-2
-Refer to Figure 17-2. If the economy starts at c and the money supply growth rate increases, where does the economy move to in the long run?

Question

Figure 17-2 
-Refer to Figure 17-2. 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 from point c to point e, which represents a higher price level with the same output level.

Figure 17-2 -Refer to Figure 17-2. If the Economy Starts at C