Figure 22-3.On the graph,MS represents the money supply and MD represents money demand.The usual quantities are measured along the axes.
-Refer to Figure 22-3.At the end of 2009 the relevant money-supply curve was the one labeled MS₁.At the end of 2010 the relevant money-supply curve was the one labeled MS₂.Assuming the economy is always in equilibrium,what was the economy's approximate inflation rate for 2010?

Question

Figure 22-3.On the graph,MS represents the money supply and MD represents money demand.The usual quantities are measured along the axes.

-Refer to Figure 22-3.At the end of 2009 the relevant money-supply curve was the one labeled MS₁.At the end of 2010 the relevant money-supply curve was the one labeled MS₂.Assuming the economy is always in equilibrium,what was the economy's approximate inflation rate for 2010?

Quizplus · Accepted Answer

The shift from MS1 to MS2 indicates an increase in the money supply. If the economy is in equilibrium, the inflation rate can be approximated by the percentage increase in the money supply, which is 50 percent.