Which of the Following Would Be an Example of Running

question 63

Multiple Choice

Which of the following would be an example of running monetary policy by rules?

• A) A 5 percent increase in money supply automatically leads to a 2 percent increase in real GDP.
• B) An increase in money supply automatically leads to an increase in inflation.
• C) The Fed will increase money growth to different levels, depending on the severity of the recession.
• D) A 1 percent drop in real GDP will automatically elicit a 2 percent increase in money supply.