If the Fed Adheres to a Strict "Money Growth Rule $\vec { M }$

question 17

Multiple Choice

If the Fed adheres to a strict "money growth rule" of 3% (that is,they keep $\vec { M }$ at 3% no matter what) ,what happens if velocity growth ( $\vec { v }$ ) drops?

• A) Inflation,real growth,and nominal wage growth all decrease.
• B) Inflation increases,but real growth and nominal wage growth decrease.
• C) Inflation and nominal wage growth decrease,but real growth increases.
• D) Inflation,real growth,and nominal wage growth all increase.

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Definitions:

Illegality of Object

The principle that a contract is void if it involves actions or outcomes that are illegal or against public policy.

Cocaine

Cocaine is a powerful stimulant drug derived from the leaves of the coca plant, often used recreationally for its euphoric effects but illegal in many jurisdictions.

Rescission

The act of cancelling a contract, returning all parties to their pre-contractual state, often due to mistakes, fraud, or misrepresentation.

Fraudulent Misrepresentation

False statements or claims made deceitfully to induce another party into a contract, leading to harm or loss.