How has growth in M2 minus the growth in real GDP compared to the inflation rate in the United States?
What will be an ideal response?
Since 1960, M2 growth minus the growth in real GDP has been closely correlated with inflation rates. The period of rapid inflation, during the 1970s, occurred at the same time there was a high growth rate of M2 minus the growth rate of real GDP. This correlation is present throughout all the years.
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In the basic Keynesian model, an increase in transfer payments:
A. increases short-run equilibrium output. B. increases potential output. C. reduces short-run equilibrium output. D. reduces potential output.
If (X ? IM) < 0, then capital inflows
A. will be zero. B. will be greater than zero. C. will be less than zero. D. can be zero, positive, or negative.
The US government sets the poverty line equal to approximately
a. three times the cost of providing subsidized housing. b. three times the cost of providing an adequate diet. c. the minimum wage for a single person working 40 hours per week and 50 weeks per year. d. the cost of providing food, shelter, and health care expenses for a family of four.
"Any tax cut to increase demand for output should favor lower-income people" is a ________ statement about ________ policy.
A. normative; monetary B. normative; fiscal C. positive; monetary D. positive; fiscal