Given the Expected Price Level, What Size of Money Supply

question 29

Multiple Choice

Given the expected price level, what size of money supply will best facilitate policies for the achievement of potential GDP?  

• A) a large money supply, so that prices at potential GDP are below expectations and people can afford to buy enough goods to support the natural level of employment 
• B) a large enough money supply that prices at potential GDP are above expectations and firms can afford to hire workers 
• C) a small money supply, so that prices at potential GDP are above expectations and firms can afford to hire the workers 
• D) a money supply that is exactly the size needed to make prices equal to the prices people expect to prevail

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Definitions:

Amazon Fulfillment Center

A warehouse facility where Amazon stores, packs, and ships products on behalf of sellers using Amazon's platform.

B2B Transaction

A commercial transaction between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.

B2C Transaction

A commercial exchange wherein businesses sell goods or services directly to consumers, typically through retail outlets or online platforms.

Commission

Compensation or financial incentive for salespeople based on a fixed percentage of their sales.