If monetary equilibrium were to occur
A) inflation would not occur.
B) deflation would not occur.
C) the price level would be stable.
D) all of the above would be true.
E) none of the above would be true.
D
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Which of the statements best describes why the aggregate demand curve is downward sloping?
a. As the aggregate price level increases, consumer expectations about the future change. b. As the aggregate price level decreases, the stock of existing physical capital increases. c. An increase in the aggregate price level causes consumer and investment spending to fall, because consumer purchasing power decreases and money demand increases. e. As a good's price increases, holding all else constant, the good's quantity demanded decreases.
While legislation enacted in 1998 granted the Bank of Japan new powers and greater autonomy, its critics contend that its independence is
A) limited by the Ministry of Finance's veto power over a portion of its budget. B) too great because it need not pursue a policy of price stability even if that is the popular will of the people. C) too great since the Ministry of Finance no longer has veto power over the bank's budget. D) limited since the Ministry of Finance can dismiss senior bank officials.