Figure 17-3
-Refer to Figure 17-3. Starting from c and 3, in the short run, where does an unexpected decrease in money supply growth move the economy to?
A) a and 1
B) b and 2
C) e and 5
D) d and 4

Question

Figure 17-3 
-Refer to Figure 17-3. Starting from c and 3, in the short run, where does an unexpected decrease in money supply growth move the economy to?
A) a and 1 
B) b and 2 
C) e and 5 
D) d and 4

Quizplus · Accepted Answer

An unexpected decrease in money supply growth shifts AD to the left, leading to a decrease in output (Y) and a decrease in the price level (P). The new equilibrium position is at point b and 2.

Figure 17-3 -Refer to Figure 17-3. Starting from C and 3, in and 3