When the Federal Reserve Increases the Growth Rate of the Money

question 33

Multiple Choice

When the Federal Reserve increases the growth rate of the money supply to combat a negative real shock,the growth rate of real GDP:

• A) will increase more than the inflation rate.
• B) will increase less than the inflation rate.
• C) and the inflation rate will both increase by the same amount.
• D) and the inflation rate will both decrease by the same amount.

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Definitions:

Marginal Utility

The additional satisfaction or utility received by consuming one more unit of a good or service.

Total Utility

The total satisfaction received from consuming a given total quantity of a good or service.

Marginal Utility

The additional satisfaction or benefit received by consuming one more unit of a good or service.

Consumer Demand Curve

illustrates the relationship between the price of a good or service and the quantity demanded by consumers over a period, typically showing an inverse relationship.