Use the figure below to answer the following questions.
Figure 12.1.1
-Refer to Figure 12.1.1.Suppose the economy moves 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 uncertainty about future sales and profits
B)an increase in the growth rate of the quantity of money
C)a decrease in the money wage rate
D)a decrease in exports
E)an increase in the money wage rate

Question

Use the figure below to answer the following questions.
  Figure 12.1.1
-Refer to Figure 12.1.1.Suppose the economy moves 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 uncertainty about future sales and profits 
B)an increase in the growth rate of the quantity of money 
C)a decrease in the money wage rate 
D)a decrease in exports 
E)an increase in the money wage rate

Quizplus · Accepted Answer

According to the monetarist theory of the business cycle, changes in the economy are largely driven by changes in the quantity of money. An increase in the growth rate of the quantity of money could have caused the economy to move from point D to point B.

Use the Figure Below to Answer the Following Questions