Figure 16-2

-Refer to the Figure 16-2.Suppose the economy is initially at point c. If the money supply increases, where does the economy move to in the short-run?

Question

Figure 16-2
 
-Refer to the Figure 16-2.Suppose the economy is initially at point c. If the money supply increases, where does the economy move to in the short-run?

Quizplus · Accepted Answer

The increase in money supply will shift the AD curve to the right. As a result, the equilibrium output and price level will increase, causing the economy to move to point d.

Figure 16-2 -Refer to the Figure 16-2.Suppose the Economy Is Initially at Economy