"The Rigid Link Between Monetary Growth and Inflation

question 89

Multiple Choice

"The rigid link between monetary growth and inflation ...had been broken." M1 grew faster in the deflationary 1980s than in the inflationary 1970s.Why?

• A)The demand for money increased,reducing spending.
• B)The demand for money decreased,due to financial deregulation.
• C)The demand for money increased,as did velocity.
• D)The demand for money decreased and the Fed targeted the money supply.

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Definitions:

Francisco de Zurbarán

A Spanish painter of the Baroque period known for his religious paintings, still lifes, and for his depictions of monks and saints.

Juan Sánchez Cotán

A Spanish Baroque painter, renowned for his pioneering and highly realistic still life paintings.

Guido Reni

An Italian painter of high-Baroque style, renowned for his graceful figures and religious as well as mythological themes.

Casino Rospigliosi

A historical building in Rome, Italy, known for housing important artworks, including frescoes by the artist Guido Reni.