Figure 35-4
Use the graph below to answer the following questions.
-Refer to Figure 35-4.If the economy starts at C and the money supply growth rate increases,then in the short run the economy moves to

Question

Figure 35-4
Use the graph below to answer the following questions. 
-Refer to Figure 35-4.If the economy starts at C and the money supply growth rate increases,then in the short run the economy moves to

Quizplus · Accepted Answer

An increase in the money supply growth rate shifts the aggregate demand curve to the right (from AD1 to AD2), leading to a short-run equilibrium at point B, where output increases and prices rise. Points D and F represent long-run equilibrium points that are determined by factors other than the money supply growth rate, so they are not consistent with the question.

Figure 35-4 Use the Graph Below to Answer the Following Questions