Refer to the above figure. The economy initially is at point A. The Fed unexpectedly increases the money supply. Which of the following statements are TRUE?
A) In the short run, the economy will move from point A to point C. In the long run, the economy will move to point B.
B) In the short run, the economy will move from point A to point C. In the long run, the economy will move back to point A.
C) In the short run, the economy will move from point A to point B. In the long run, the economy will stay at point B.
D) In the short run, the economy will move from point A to point B. In the long run, the economy will move back to point A.
D
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People will buy more of a normal good when their income decreases
Indicate whether the statement is true or false
If nominal GDP is $12 trillion, the price level is 120, and the quantity of money is $4 trillion, what is the velocity of circulation?
A) 3 B) 2.5 C) 30 D) 25