If Only Unanticipated Changes in the Money Supply Affect Real

question 94

Multiple Choice

If only unanticipated changes in the money supply affect real GDP, the public has rational expectations, and everyone has the same information about the state of the economy, then:

• A) monetary policy can be used to systematically stabilize output.
• B) monetary policy cannot be used to systematically stabilize output.
• C) a policy of keeping the money supply constant is optimal.
• D) a policy of adjusting the money supply in response to the state of the economy is optimal.

---

Definitions:

Lucrative Trade

A trade or business operation that generates a substantial amount of profit.

Royal Governors

Representatives appointed by a monarch to govern a colony, region, or country in the monarch's stead.

Colonial Control

The power and authority that a colonizing nation exerts over a colony, often involving exploitation of resources, suppression of cultural practices, and imposition of foreign governance.

Male Voters

Individuals who are legally recognized as male and have the right to vote in elections.