The monetarists' prescription for monetary policy is called the "monetary rule." The monetary rule means that
A. monetary policy does not have an impact on the economy until 6 to 9 months after the money supply is changed.
B. expansionary fiscal policy should be accompanied by an easy monetary policy.
C. the annual rate of increase in the money supply should be equal to the long-term increase in the price level.
D. the rate of increase in the money supply should be slow and steady; for price stability it should equal the potential annual growth rate of real GDP.
D. the rate of increase in the money supply should be slow and steady; for price stability it should equal the potential annual growth rate of real GDP.
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If the interest elasticity of money demand is -0.1, by what percent does money demand change if the nominal interest rate rises from 2% to 3%?
A) -0.1% B) 5% C) 0% D) -5%
An improvement in technology shifts the supply curve rightward
a. True b. False
When the Fed wants to expand the money supply through open market operations, it: a. sells government securities
b. purchases government securities. c. increase the Fed Funds rate. d. decrease reserve requirements.
Suppose a McDonald's Big Mac costs 30 pesos in Argentina. At the same time, suppose the exchange rate between the peso and the euro is roughly 15 pesos per euro. According to purchasing power parity, a Big Mac in Europe should cost:
A. 15 euros. B. 30 euros. C. 2 euros. D. 0.50 euros.