Figure 16-3
-Refer to the Figure 16-3.Starting from c and 3,in the long run,where does an increase in money supply growth move the economy to?
A) a and 1
B) e and 4
C) d and 4
D) e and 5

Question

Figure 16-3 
-Refer to the Figure 16-3.Starting from c and 3,in the long run,where does an increase in money supply growth move the economy to?
A) a and 1 
B) e and 4 
C) d and 4 
D) e and 5

Quizplus · Accepted Answer

According to the figure, an increase in money supply growth would shift the AD (aggregate demand) curve to the right, leading to an increase in both output (real GDP) and price level. This would move the economy from point c and 3 towards the new equilibrium point where the SRAS (short-run aggregate supply) and the AD curve intersect, which is e and 5.

Figure 16-3 -Refer to the Figure 16-3.Starting from C and 3,in the and 3,in