If Real GDP Increases at an Annual Rate of 3

question 35

Multiple Choice

If Real GDP increases at an annual rate of 3 percent and velocity increases at a rate of 2 percent per year,then rules-based monetary policy advocates who wish to maintain a stable price level would set the annual money supply growth rate at

• A)-2 percent.
• B)0 percent.
• C)1 percent.
• D)6 percent.
• E)-1 percent.

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Definitions:

Sales Growth Rate

The increase in sales over a specific period, typically expressed as a percentage, highlighting the company's ability to expand its operations and revenue.

Full Capacity Sales

The maximum potential sales revenue a company can achieve with its current resources and facilities, assuming full efficiency.

Net Income

A measure of a company's profitability, calculated as revenue minus expenses, taxes, and costs.

Fixed Assets

Tangible assets expected to be used in business operations for a period longer than one year, such as equipment, real estate, and vehicles.