-In the above figure, suppose the economy starts at point A. The short-run response to an increase in the growth rate of the quantity of money in the monetarist business cycle theory is for the price level to __________and real GDP to__________ .
A) rise to 130; remain at $13 trillion
B) fall to 90; remain at $13 trillion
C) remain at 110; remain at $13 trillion
D) rise to 120; increase to $15 trillion

Question

-In the above figure, suppose the economy starts at point A. The short-run response to an increase in the growth rate of the quantity of money in the monetarist business cycle theory is for the price level to __________and real GDP to__________ .
A) rise to 130; remain at $13 trillion 
B) fall to 90; remain at $13 trillion 
C) remain at 110; remain at $13 trillion 
D) rise to 120; increase to $15 trillion

Quizplus · Accepted Answer

In the monetarist business cycle theory, an increase in the growth rate of the quantity of money leads to a short-run increase in both the price level and real GDP.

-In the Above Figure, Suppose the Economy Starts at Point