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

Question

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

Quizplus · Accepted Answer

In the long run, an increase in money supply growth typically leads to higher inflation without affecting real output. Therefore, the economy moves to a higher inflation rate while maintaining the same level of output, which corresponds to point e and 5.

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