The rules-based monetary policy reads: The money supply will increase 3 percent each year. If the average annual growth rate in Real GDP is 2 percent and velocity increases by 1 percent each year, it follows that
A) the price level will, on average, rise 2 percent a year.
B) the price level will rise 2 percent this year.
C) in some years the price level will rise by more than in other years.
D) in some years the price level may not change at all.
E) a, c and d
E
Economics
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The difference between a firm's assets and its liabilities is known as:
A) limited liability B) stock C) equity D) profit
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Which of the following would most likely occur if the federal government decreased its spending and reduced the size of the budget deficit during a period of full employment?
a. The rate of inflation would decline. b. The rate of inflation would rise. c. A recession would develop. d. Interest rates would fall.
Economics