Use the graph below to answer the next question Inflation ra

Use the graph below to answer the next question Inflation rate, m 16% -. 3% 3%-2%-1% 3% Real GDP growth rate Refer to the above graph. This economy initially begins at Point A and a negative real shock takesit to Point Y. If the Federal Reserve reacts by increasing money growth by 3%, this would take the economy to: Point X. O Point V Point B Point A. None of the above choices is correct.

Solution

Question:- This economy initially begins at Point A and a negative supply shock takes it to Point Y. If the Fed reacts by increasing money growth by 3 percent, this would take the economy to

Answer:- Point X