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MadibaVille began the year in long-run equilibrium. After extensive consultations with the country's central bank, MadibavVille's government announced in March that credit cards may be used when making purchases. The velocity of money subsequently increased. As a result of this decision what path of output and prices would be observed in the economy? Initial situation Long-run 100; 1.2 90; 1 100; 1 100; 1.2 Short-run Option Option 1 Option 2 Option 3 Option 4 100; 1 100; 1 100; 1 100; 1 120; 1 120; 1.2 90; 1.2 100; 1.2

MadibaVille began the year in long-run equilibrium. After extensive consultations with the country's central bank, MadibavVille's government announced in March that credit cards may be used when making purchases. The velocity of money subsequently increased. As a result of this decision what path of output and prices would be observed in the economy? Initial situation Long-run 100; 1.2 90; 1 100; 1 100; 1.2 Short-run Option Option 1 Option 2 Option 3 Option 4 100; 1 100; 1 100; 1 100; 1 120; 1 120; 1.2 90; 1.2 100; 1.2

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter10: Dynamic Change, Economic Fluctuations, And The Ad-as Model
Section: Chapter Questions
Problem 12CQ
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Select one: O a. Option 1 illustrates the path that would be observed. Oa. O b. Option 2 illustrates the path that would be observed. O c. Option 3 illustrates the path that would be observed. O d. Option 4 illustrates the path that would be observed
Transcribed Image Text:Select one: O a. Option 1 illustrates the path that would be observed. Oa. O b. Option 2 illustrates the path that would be observed. O c. Option 3 illustrates the path that would be observed. O d. Option 4 illustrates the path that would be observed
MadibaVille began the year in long-run equilibrium. After extensive consultations with the country's central bank, MadibaVille's government announced in March that credit cards may be used when making purchases. The velocity of money subsequently increased. As a result of this decision what path of output and prices would be observed in the economy? Option Option 1 Option 2 Option 3 Option 4 Initial situation 100; 1 100; 1 100; 1 100; 1 Short-run 120; 1 120; 1.2 90; 1.2 100; 1.2 Long-run 100; 1.2 90, 1 100 1 100; 1.2
Transcribed Image Text:MadibaVille began the year in long-run equilibrium. After extensive consultations with the country's central bank, MadibaVille's government announced in March that credit cards may be used when making purchases. The velocity of money subsequently increased. As a result of this decision what path of output and prices would be observed in the economy? Option Option 1 Option 2 Option 3 Option 4 Initial situation 100; 1 100; 1 100; 1 100; 1 Short-run 120; 1 120; 1.2 90; 1.2 100; 1.2 Long-run 100; 1.2 90, 1 100 1 100; 1.2
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