Use the Figure Below to Answer the Following Question

question 98

Multiple Choice

Use the figure below to answer the following question.

Figure 28.2.4
-Refer to Figure 28.2.4. The figure illustrates an economy initially in equilibrium at point A. If the quantity of money is expected to increase by 50 percent, what is the rational expectation of the price level?

• A)100
• B)120
• C)130
• D)150
• E)We cannot tell without more information on wage negotiations.

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