Refer to the information provided in Figure 18.2 below to answer the questions that follow.
Figure 18.2
-Refer to Figure 18.2.Suppose the economy is at Point A.According to the rational expectation theory,an unanticipated increase in money supply
A)leaves the economy at Point A.
B)moves the economy to Point B.
C)moves the economy to Point C.
D)moves the economy to Point D.

Question

Refer to the information provided in Figure 18.2 below to answer the questions that follow.
  Figure 18.2
-Refer to Figure 18.2.Suppose the economy is at Point A.According to the rational expectation theory,an unanticipated increase in money supply
A)leaves the economy at Point A. 
B)moves the economy to Point B. 
C)moves the economy to Point C. 
D)moves the economy to Point D.

Quizplus · Accepted Answer

An unanticipated increase in money supply will shift the aggregate demand curve to the right, moving the economy from Point A to Point B.

Refer to the Information Provided in Figure 18