If the Money Supply Is Growing at a Constant Rate

question 234

Multiple Choice

If the money supply is growing at a constant rate of 2% and the economy undergoes a negative demand shock, the theory of monetarism recommends:

• A) coordinating a monetary expansion with a fiscal expansion to increase aggregate demand.
• B) raising the growth rate of money supply to 3% to lower the interest rate.
• C) lowering the growth rate of money supply to 1% to increase saving.
• D) maintaining the growth rate of money supply at 2% and letting the aggregate price level fall.

Understand how the design of a study affects the interpretation of its results.

Understand the concept of marginal utility and how it affects consumer choices.

Calculate total utility from given data.

Derive marginal utility from changes in total utility.

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