Figure 4.5 -Figure 4.5 Illustrates the Effect of an Increased Rate of an Increased

Multiple Choice

Figure 4.5

-Figure 4.5 illustrates the effect of an increased rate of money supply growth.From the figure,one can conclude that the liquidity effect is ________ than the expected inflation effect and interest rates adjust ________ to changes in expected inflation.

A) smaller; quickly
B) larger; quickly
C) larger; slowly
D) smaller; slowly