-Refer to the Above Figure

question 290

Multiple Choice

-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.

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