Figure 16-1
-Refer to Figure 16-1.If the economy starts at c and 1,then in the short run,where does an increase in the money supply move the economy?

Question

Figure 16-1 
-Refer to Figure 16-1.If the economy starts at c and 1,then in the short run,where does an increase in the money supply move the economy?

Quizplus · Accepted Answer

An increase in the money supply shifts the AD curve to the right, causing output to increase from Y1 to Y2 and the price level to increase from P1 to P2. The new equilibrium is at point b and 2, as output and prices have both increased.

Figure 16-1 -Refer to Figure 16-1.If the Economy Starts at C and at C