Refer to the information provided in Figure 12.4 below to answer the questions that follow.
Figure 12.4
-Refer to Figure 12.4.Suppose the economy is at Point A,an increase in the price level moves the economy to Point
A)E.
B)B.
C)C.
D)D.

Question

Refer to the information provided in Figure 12.4 below to answer the questions that follow.
  Figure 12.4
-Refer to Figure 12.4.Suppose the economy is at Point A,an increase in the price level moves the economy to Point
A)E. 
B)B. 
C)C. 
D)D.

Quizplus · Accepted Answer

An increase in the price level from Point A would result in a decrease in real money balances, causing a decrease in consumption and investment spending. This would lead to a movement along AD to the left, ending at Point B.

Refer to the Information Provided in Figure 12