-In the above figure, suppose the economy has moved from point A to point C. According to the monetarist theory of the business cycle, what could have caused this movement?
A) a decrease in the growth rate of the quantity of money
B) an increase in the growth rate of the quantity of money
C) an increase in the money wage rate
D) an increase in uncertainty

Question

-In the above figure, suppose the economy has moved from point A to point C. According to the monetarist theory of the business cycle, what could have caused this movement?
A) a decrease in the growth rate of the quantity of money 
B) an increase in the growth rate of the quantity of money 
C) an increase in the money wage rate 
D) an increase in uncertainty

Quizplus · Accepted Answer

According to monetarist theory, a decrease in the growth rate of the quantity of money can lead to a slowdown in economic activity, causing the economy to move from a higher output point (A) to a lower output point (C).

-In the Above Figure, Suppose the Economy Has Moved from Point