-In the above figure, suppose that the economy is at point A when the quantity of money increases. In the short run, the economy will move to point
A) A, that is, the price level and level of real GDP will not change.
B) B.
C) C.
D) D.

Question

-In the above figure, suppose that the economy is at point A when the quantity of money increases. In the short run, the economy will move to point
A) A, that is, the price level and level of real GDP will not change. 
B) B. 
C) C. 
D) D.

Quizplus · Accepted Answer

In the short run, an increase in the quantity of money will lead to an increase in aggregate demand, which will shift the AD curve to the right. This will cause the price level to rise and the level of real GDP to increase, moving the economy to point B.

-In the Above Figure, Suppose That the Economy Is at Point