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Figure: Interpreting Equations on a Graph
-(Figure: Interpreting Equations on a Graph)In the graph,if y stands for inflation,and x stands for the money supply,then:
A) for every 1% increase in the money supply,inflation increases by 0.6%.
B) for every 1% increase in inflation,the money supply increases by 0.6%.
C) if the money supply increases by 14,then inflation goes up 0.6%.
D) if inflation increases by 14,then inflation goes up 0.6%.

Question

Use the following to answer questions 
Figure: Interpreting Equations on a Graph 
-(Figure: Interpreting Equations on a Graph)In the graph,if y stands for inflation,and x stands for the money supply,then:
A) for every 1% increase in the money supply,inflation increases by 0.6%. 
B) for every 1% increase in inflation,the money supply increases by 0.6%. 
C) if the money supply increases by 14,then inflation goes up 0.6%. 
D) if inflation increases by 14,then inflation goes up 0.6%.

Quizplus · Accepted Answer

According to the graph, the slope of the line representing the equation is 0.6, which means for every 1% increase in the money supply (x), inflation (y) increases by 0.6%. Therefore, option A is correct. Option B is incorrect because it suggests that an increase in inflation causes an increase in money supply. Option C is incorrect because it suggests a specific increase in money supply causes a specific increase in inflation. Option D is incorrect because it suggests that an increase in inflation causes a percentage increase in itself, which is illogical.

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