Figure 22-6
Use the two graphs in the diagram to answer the following questions.
-Refer to Figure 22-6. Starting from C and 3, in the long run, a decrease in money supply growth moves the economy to
A)A and 1.
B)back to C and 3.
C)D and 4.
D)F and 5.

Question

Figure 22-6
Use the two graphs in the diagram to answer the following questions. 
-Refer to Figure 22-6. Starting from C and 3, in the long run, a decrease in money supply growth moves the economy to
A)A and 1. 
B)back to C and 3. 
C)D and 4. 
D)F and 5.

Quizplus · Accepted Answer

According to the graphs, a decrease in money supply growth leads to a decrease in inflation and output in the long run. This means the economy would move to point A (lower inflation, lower output) from the initial point C and 3.

Figure 22-6 Use the Two Graphs in the Diagram to Answer the Answer