Figure 35-7
Use the two graphs in the diagram to answer the following questions.
-Refer to Figure 35-7.Starting from C and 3,in the short run,an unexpected decrease in money supply growth moves the economy to
A)A and 1.
B)B and 2.
C)back to C and 3.
D)D and 4.

Question

Figure 35-7
Use the two graphs in the diagram to answer the following questions. 
-Refer to Figure 35-7.Starting from C and 3,in the short run,an unexpected decrease in money supply growth moves the economy to
A)A and 1. 
B)B and 2. 
C)back to C and 3. 
D)D and 4.

Quizplus · Accepted Answer

An unexpected decrease in money supply growth typically leads to higher interest rates, reducing aggregate demand and output, moving the economy to a lower output and price level, such as B and 2.

Figure 35-7 Use the Two Graphs in the Diagram to Answer the Answer