How useful is M2 in tracking inflation? Explain.
What will be an ideal response?
Empirical research mentioned in the chapter shows that across many countries, high rates of growth in M2 were associated with high rates of inflation and relatively low growth rates in M2 in many countries also were associated with low rates of inflation. For this reason many economists believe that, at least for moderate inflation rates, controlling inflation means controlling the money growth.
You might also like to view...
Refer to the table below. The law of diminishing marginal returns becomes evident after ________ units of output are produced.OutputPer DayNumber ofEmployeeHours Per Day00331662994132716511
A. 66 B. 33 C. 132 D. 99
Which of the following industries would be considered to have a capital intensive production process?
A. Creating a painting. B. Farming in a rich country C. Creating a hand-crafted wine. D. Serving food at a restaurant.
You put money into an account and earn an after-tax real interest rate of 2.5 percent. If the nominal interest rate on the account is 8 percent and the inflation rate is 2 percent, then what is the tax rate?
a. 28.00 percent b. 36.25 percent c. 43.75 percent d. 67.50 percent
Under perfect competition, the individual firm's economic profit is 
Figure 42.2
A. zero. B. the larger of the dashed-line boxes. C. between the size of the two dashed-line boxes. D. the smaller of the dashed-line boxes.