It Is Generally Agreed That When the Rate of Monetary

question 55

Multiple Choice

It is generally agreed that when the rate of monetary growth exceeds the rate of growth in real GDP in the long run

• A)the inflation rate will increase every year by a constant rate.
• B)real GDP will grow at a faster rate.
• C)the average price level will tend to decrease over time.
• D)the average price level will tend to increase over time.
• E)the inflation rate will decrease every year until it ultimately equals zero.

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Definitions:

Gains From Trade

The benefit that entities receive from engaging in voluntary trade, often resulting in better allocation of resources and increased efficiency.

Comparative Advantage

The proficiency of an entity, whether it's an individual, corporate body, or state, to create a good or offer a service at a more economical opportunity cost than its competition.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing a particular course of action.

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors, leading to more efficient global production patterns.