If the Economy's Real Output Is Growing by 2

question 126

Multiple Choice

If the economy's real output is growing by 2.5 percent a year, then, in order to maintain price stability, a monetarist would most likely recommend that money supply should be

• A) held constant.
• B) decreased by 1 percent a year.
• C) increased by 2.5 percent a year.
• D) increased by 7.5 percent a year.

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Definitions:

Demand

The total amount of a good or service that consumers are willing and able to purchase at a given price in a specified time period.

Supply

The total amount of a product or service that is available for purchase at any given price.

Labor Union

A collective organization of employees who bargain as a unit with employers.

Autoworkers

Employees in the automotive industry who are involved in the design, development, manufacturing, marketing, and selling of motor vehicles.