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

Question

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

Quizplus · Accepted Answer

According to monetarist theory, an increase in the growth rate of the quantity of money can lead to economic expansion, moving the economy from a lower output point (D) to a higher output point (B).

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