Choose the letter of the diagram in Figure 16.1 that monetarists would use to illustrate the effect of an increase in the quantity of money on the economy.
Definitions:
APC
In economics, stands for Average Propensity to Consume, which is the ratio of total consumption to total disposable income.
APC
Average Propensity to Consume, which is the fraction of income that households spend on consumption as opposed to saving.
APS
Stands for Average Propensity to Save, which measures the proportion of income that households save rather than spend on goods and services.
Autonomous Consumption
The level of consumption that occurs when income is zero, representing the consuming behavior independent of current income.
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