Figure 22-5
Use the graph below to answer the following questions.
-Refer to Figure 22-5. If the economy starts at C and the money supply growth rate increases, in the long run the economy
A)stays at C.
B)moves to B.
C)moves to F.
D)None of the above is consistent wit an increase in the money supply growth rate.

Question

Figure 22-5
Use the graph below to answer the following questions. 
-Refer to Figure 22-5. If the economy starts at C and the money supply growth rate increases, in the long run the economy
A)stays at C. 
B)moves to B. 
C)moves to F. 
D)None of the above is consistent wit an increase in the money supply growth rate.

Quizplus · Accepted Answer

According to the graph, if the money supply growth rate increases, the economy will move from point C to point F in the long run. This is because, as the money supply increases, the aggregate demand curve will shift to the right, leading to an increase in both output and price level. The economy will eventually reach a new equilibrium at point F, where the aggregate demand curve intersects with the long-run aggregate supply curve.

Figure 22-5 Use the Graph Below to Answer the Following Questions