(Last Word) Suppose That a Prediction Market for Nominal GDP

question 2

Multiple Choice

(Last Word) Suppose that a prediction market for nominal GDP is predicting 6 percent growth in nominal GDP, but the Fed?s desired rate of nominal GDP growth is 5 percent. According to the
Market monetarist view, the Fed should

• A) employ a restrictive monetary policy until the predictions market adjusts nominal GDP growth predictions down to a 5 percent growth rate.
• B) employ an expansionary monetary policy until the predictions market adjusts nominal GDP growth predictions down to a 5 percent growth rate.
• C) do nothing, as the market will adjust itself.
• D) adhere to a strict monetary rule of 5 percent growth in the money supply.

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Definitions:

Double-ring Molecule

Compounds containing two connected cyclic structures, which can include aromatic compounds such as naphthalene.

Nucleic Acid

Complex organic substances that serve as the blueprint for genetic information in living organisms, primarily DNA andRNA, which encode the instructions for synthesizing proteins.

Carbohydrate

Compound containing carbon, hydrogen, and oxygen, in the approximate ratio of C:2H:O (e.g., sugars, starch, and cellulose).

Lipid

A group of naturally occurring molecules that include fats, waxes, sterols, fat-soluble vitamins (such as vitamins A, D, E, and K), monoglycerides, diglycerides, triglycerides, phospholipids, and others.