Figure 35-2
Use the pair of diagrams below to answer the following questions.
-Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,an increase in the money supply growth rate moves the economy to
A)A and 1
B)B and 2
C)C and 3
D)None of the above is correct.

Question

Figure 35-2
Use the pair of diagrams below to answer the following questions. 
-Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,an increase in the money supply growth rate moves the economy to
A)A and 1 
B)B and 2 
C)C and 3 
D)None of the above is correct.

Quizplus · Accepted Answer

An increase in the money supply growth rate will shift the AD curve to the right, causing an increase in output (Y) and price level (P). The short-run equilibrium will move from point C and 1 to point B and 2, where the new AD curve intersects with the SRAS curve.

Figure 35-2 Use the Pair of Diagrams Below to Answer the Following