Friedman and Schwartz's Work a Monetary History of the United

question 105

Multiple Choice

Friedman and Schwartz's work A Monetary History of the United States, 1867-1960 showed that the business cycle historically was associated with fluctuations in:

• A) prices.
• B) interest rates.
• C) the money supply.
• D) business investment.

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Definitions:

Quarterly Compounding

The process of calculating interest earned on an investment or loan every three months, leading to interest being earned on interest.

Compounded Quarterly

The process of computing interest on a principal sum where the interest is calculated every quarter and added to the sum, leading to interest earned on interest.

Monthly Compounding

The process where interest is calculated on a monthly basis and added to the principal, allowing the investment to grow with each month.

Average Annual Rate

A calculated mean that represents the per-year interest rate over the term of a loan or investment.