Figure 16-2
-Refer to the Figure 16-2.Suppose the economy is initially at point c.If the money supply growth rate decreases,where does the economy move to in the short-run?

Question

Figure 16-2 
-Refer to the Figure 16-2.Suppose the economy is initially at point c.If the money supply growth rate decreases,where does the economy move to in the short-run?

Quizplus · Accepted Answer

In the short-run, a decrease in the money supply growth rate typically leads to higher interest rates, which can reduce investment and consumer spending, causing the economy to move to a point with lower output and possibly higher unemployment, such as point b.

Figure 16-2 -Refer to the Figure 16-2.Suppose the Economy Is Initially at Is