-In the above figure, suppose the economy starts at point A. The short-run response to a decrease in the growth rate of the quantity of money in the monetarist business cycle theory moves the economy to point
A) B.
B) C.
C) D.
D) E.

Question

-In the above figure, suppose the economy starts at point A. The short-run response to a decrease in the growth rate of the quantity of money in the monetarist business cycle theory moves the economy to point
A) B. 
B) C. 
C) D. 
D) E.

Quizplus · Accepted Answer

In the monetarist business cycle theory, a decrease in the growth rate of the quantity of money would lead to a decrease in aggregate demand. This would move the economy from a point of higher output and price level (point A) to a point of lower output and price level in the short run, which is represented by point D.

-In the Above Figure, Suppose the Economy Starts at Point