A Perceived Permanent Rise in the Rate of Money Growth

question 157

Multiple Choice

A perceived permanent rise in the rate of money growth will cause what long-run effects in the economy?

• A) a rise in the nominal rate of interest and a rise in inflation by the same percentage
• B) a rise in the nominal rate of interest and a rise in real GDP by the same percentage
• C) a fall in the nominal rate of interest and a rise in inflation by the same percentage
• D) a fall in the nominal rate of interest and a fall in real GDP by the same percentage

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, typically with fixed dividends.

Tax Considerations

The factors concerning the tax implications of any financial decision, investment strategy, or transaction, which can affect the overall benefit or cost to an individual or business.

Risk Tolerance

An individual's or financial entity's capacity to endure loss or volatility in investment value while attempting to achieve investing goals.

Weighted Average Cost

A calculation that takes into account the various costs of goods based on their relative weights, to arrive at an average cost per unit.