Under a gold standard system, central banks can follow an independent monetary policy

Which of the following statements is true?

A) Advancements in statistical methods and data collection have made it possible for the Fed to closely link the changes in the rate of growth in M1 and M2 with changes in the rate of growth of GDP . B) The introduction of new financial products and changes in the ways people pay for transactions have blurred the distinction between M1 and M2 so that the Fed no longer has reliable estimates of the money demand curve. C) With the proliferation of new financial products, the close relationship between M1 growth and output growth has been further strengthened. D) Unlike the demand for M1, the demand for the much broader M2 money aggregate is unaffected by the financial innovation in interest bearing checking deposits.

You want to invest in a firm whose profits show small fluctuations throughout the business cycle. Which of the following would you invest in?

A) A corporation that depends heavily on business fixed investment B) A corporation that depends heavily on residential investment C) A corporation that depends heavily on consumer nondurables D) A corporation that depends heavily on consumer durables