The Traditional Monetary Rule Is the Idea That

question 41

Multiple Choice

The traditional monetary rule is the idea that

• A) the annual rate of increase in the money supply should be equal to the potential annual growth rate of real GDP.
• B) the annual rate of increase in the money supply should be equal to the long-term increase in the price level.
• C) an expansionary fiscal policy should always be accompanied by an easy monetary policy.
• D) monetary policy only affects the economy 6 to 9 months after the money supply is changed.

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