Figure 15-4
-In Figure 15-4,if initial equilibrium is at point A and there is an anticipated increase in aggregate demand from A D₁ to A D₂ due to an anticipated increase in the money supply,then
A)the economy will move directly from point A to point C without passing through point B.
B)the economy will move directly from point A to point B,and will remain at point B in the long run.
C)the price level will shift to P₂ in the short run.
D)the price level will shift to P₂ in the long run.

Question

Figure 15-4 
-In Figure 15-4,if initial equilibrium is at point A and there is an anticipated increase in aggregate demand from A D₁ to A D₂ due to an anticipated increase in the money supply,then
A)the economy will move directly from point A to point C without passing through point B. 
B)the economy will move directly from point A to point B,and will remain at point B in the long run. 
C)the price level will shift to P₂ in the short run. 
D)the price level will shift to P₂ in the long run.

Quizplus · Accepted Answer

The economy will move directly from point A to point C without passing through point B because an increase in aggregate demand will lead to an increase in both output and the price level in the short run.

Figure 15-4 -In Figure 15-4,if Initial Equilibrium Is at Point a and Point