Figure 35-3

-Refer to Figure 35-3. If the economy starts at C and the money supply growth rate increases, then in the short run the economy moves to
A)B.
B)F.
C)A.
D)D.

Question

Figure 35-3  ​
​
-Refer to Figure 35-3. If the economy starts at C and the money supply growth rate increases, then in the short run the economy moves to
A)B. 
B)F. 
C)A. 
D)D.

Quizplus · Accepted Answer

When the money supply growth rate increases, in the short run, it typically leads to lower interest rates, increased spending, and higher demand for goods and services. This results in an upward movement on the Phillips curve, moving the economy to a point with lower unemployment and higher inflation, which is represented by point F in the context of a typical Phillips curve diagram.

Figure 35-3 ​

Figure 35-3