Figure 16-2
-Refer to Figure 16-2. If the economy starts at c and the money supply growth rate decreases, where does the economy move to in the short run?

Question

Figure 16-2 
-Refer to Figure 16-2. If the economy starts at c and the money supply growth rate decreases, where does the economy move to in the short run?

Quizplus · Accepted Answer

In the short run, a decrease in the money supply growth rate typically leads to lower inflation and potentially higher unemployment, moving the economy to point b, which represents lower inflation and higher unemployment compared to point c.

Figure 16-2 -Refer to Figure 16-2. If the Economy Starts at C