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:

Treasury Bonds

U.S. government debt securities with a maturity of more than ten years, offering fixed interest payments.

Holding-period Return

The cumulative return gained from owning an asset or collection of assets over a specific timeframe, usually represented as a percentage.

Cash Dividend

A payment made by a company out of its earnings to shareholders in the form of cash.

Complete Portfolio

An investment strategy that includes a diverse mix of assets to optimize risk and return.