Answer This Question Based on the Diagram and the Equation

question 206

Multiple Choice

Answer this question based on the diagram and the equation of exchange. Assume that the velocity of money is constant at 4. Suppose that the increase of aggregate supply from A AS₁ to AS₂ indicates
the economy's average increase in real output per year. According to monetarists, the proper monetary rule for price stability would be to increase the money supply by

• A) zero percent per year.
• B) 4 percent per year.
• C) 10 percent per year.
• D) 30 percent per year.

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Definitions:

Contribute

To give or supply in common with others; giving assistance or support.

Benefit

The advantage or positive outcome gained from an action, investment, or decision.

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Activities, performances, or shows that are intended to provide enjoyment and relaxation to the general public.

Dominant Strategy

In game theory, a strategy that is the best choice for a player, regardless of the strategies chosen by other players.