In recent years, a monetary growth rule has fallen out of favor because
A) it is believed that active monetary policy destabilizes the economy and makes the business cycle worse.
B) the growth rate of GDP has been highly unstable.
C) the close relationship between movements in M1 and movements in real GDP has become weaker.
D) the growth rate of M1 has become more stable.
Answer: C
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The interest rate effect is part of the reason
A) the long-run aggregate supply curve is vertical. B) the aggregate demand curve is downward sloping. C) the short-run aggregate supply curve is upward sloping. D) the aggregate demand curve is upward sloping.
Which of the following individuals would be most negatively affected by anticipated inflation?
A) a student who borrows $10,000 at a nominal interest rate of 5% to finance educational expenses B) a full-time employee at a pizza parlor who makes more than the minimum wage C) a retired railroad engineer who receives a fixed income payment every month D) a union contractor whose pay is adjusted based on changes in the CPI
A catering company is producing at a point where its marginal costs are $25 and its fixed costs are $5000 . At the current price of $10 it is producing 50 meals. If the demand goes up, such that they can now charge $20 per meal, how much should the firm now produce?
a. 60 meals b. 70 meals c. 80 meals d. None, they should shut down
Which of the following is most representative of the functional finance view of the macroeconomy?
A. Budgets should be balanced. Doing otherwise is morally wrong. B. The government should decide on tax and spending plans based on their effects on the economy. C. The economy is self-regulating and the best thing the government can do to enhance stability is to stay out of the way. D. Crowding out almost completely cancels out any deficit spending, so fiscal policy is likely to be ineffective.