-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)An increase in uncertainty
B)A decrease in the growth rate of the quantity of money
C)An increase in the money wage rate
D)An increase in the growth rate of the quantity of money

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)An increase in uncertainty 
B)A decrease in the growth rate of the quantity of money 
C)An increase in the money wage rate 
D)An increase in the growth rate of the quantity of money

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 level (point A) to a lower output level (point C).

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