Suppose That a Rules-Based Monetary Policy Proposal Specifies That the Money

question 136

Multiple Choice

Suppose that a rules-based monetary policy proposal specifies that the money supply will grow 3 percent each year.If velocity grows 1 percent this year and Real GDP grows 2 percent,the price level will __________ by __________ percent.

• A)rise;3
• B)fall;2
• C)rise;2
• D)rise;6
• E)fall;5

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Definitions:

Penalty

A punishment imposed for breaking a law, rule, or contract, which often involves paying a fine or forfeiting something.

Mark-Up

The amount added to the cost of a product or service to cover overhead and profit.

Selling Price

The amount of money for which a product is sold to the customer, after accounting for discounts, rebates, and other adjustments.

Payment

The transfer of money, or its equivalent, from one party to another in exchange for goods, services, or to fulfill a legal obligation.