Figure 34-1
-Refer to Figure 34-1.If the economy starts at C,an increase in the money supply moves the economy
A)to A in the long run.
B)to B in the long run.
C)back to C in the long run.
D)to D in the long run.

Question

Figure 34-1 
-Refer to Figure 34-1.If the economy starts at C,an increase in the money supply moves the economy
A)to A in the long run. 
B)to B in the long run. 
C)back to C in the long run. 
D)to D in the long run.

Quizplus · Accepted Answer

An increase in the money supply shifts the aggregate demand curve to the right, moving the economy from C to A in the short run. In the long run, the economy will move back to its original equilibrium at C.

Figure 34-1 -Refer to Figure 34-1.If the Economy Starts at C,an Increase