-Refer to the Above Figure

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.