Which of the Following Statements Is Consistent with the Quantity

question 125

Multiple Choice

Which of the following statements is consistent with the quantity theory of money?

• A)Monetary policy should be used in the short run to try to steer the economy.
• B)The money supply should be increased by a percentage to allow for changes in productivity and growth, but that percentage cannot be determined.
• C)Expansionary monetary policy is the only way to prevent a mild recession from developing into a serious recession or depression.
• D)A prescribed monetary policy should be followed regardless of what's happening in the economy.

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Definitions:

Margin

The difference between the selling price of a product or service and its cost, or the borrowed funds used to invest in securities.

Margin Call

A demand by a broker that an investor deposits further cash or securities to cover possible losses.

Initial Margin

The initial margin is the upfront investment required when buying on margin or entering a futures contract, acting as a security deposit for the trade.

Maintenance Margin

The minimum amount of equity an investor must maintain in a margin account after the purchase has been made, to keep the position open.