The Rules-Based Monetary Policy That Some Nonactivists Have Proposed to Maintain

question 129

Multiple Choice

The rules-based monetary policy that some nonactivists have proposed to maintain price stability reads this way:

• A) The annual growth rate in the money supply will equal the average annual growth rate in Real GDP minus the growth rate in velocity.
• B) The annual growth rate in the money supply will equal the average annual growth rate in Real GDP plus the growth rate in velocity.
• C) The annual growth rate in the money supply will equal the average annual growth rate in Real GDP divided by the growth rate in velocity.
• D) The annual growth rate in the money supply will equal the average annual growth rate in Real GDP times the growth rate in velocity.

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Definitions:

Karst Topography

A landscape formed from the dissolution of soluble rocks such as limestone, characterized by underground drainage systems and sinkholes.

Sinkhole

A depression or hole in the ground caused by the collapse of a surface layer, often due to the dissolution of the underlying limestone, volcanic activity, or water drainage.

Stalactite

A type of speleothem that hangs from the ceiling of limestone caves, formed by the precipitation of minerals from water dripping down.

Calcium Carbonate

A chemical compound with the formula CaCO3, found in rocks such as limestone, and is the main component of shells of marine organisms, snails, and eggs.