Figure 15.4

-Refer to Figure 15.4. Suppose that the economy is originally in equilibrium at point a. In the short run, as the supply of money increases, the economy moves to point
A) a.
B) b.
C) c.
D) d.

Question

Figure 15.4
 
-Refer to Figure 15.4. Suppose that the economy is originally in equilibrium at point a. In the short run, as the supply of money increases, the economy moves to point
A) a. 
B) b. 
C) c. 
D) d.

Quizplus · Accepted Answer

In the short run, an increase in the money supply typically leads to lower interest rates, which increases investment and aggregate demand, shifting the economy to a higher output level, such as point c.

Figure 15.4 -Refer to Figure 15.4. Suppose That the Economy Is Originally