The cost of inflation reduction is less if people believe that the central bank will really reduce inflation

The price of oranges rises. What happens in the market for apples, which are a substitute for oranges?

A) The equilibrium price falls, and the equilibrium quantity rises. B) The equilibrium price rises, and the equilibrium quantity falls. C) The equilibrium price and quantity rise. D) The equilibrium price and quantity fall.

The monetary growth rule is a plan for increasing the quantity of money

A) at a rate which increases as the economy grows. B) at a rate which decreases as the economy declines. C) at a rate which increases during recessions and decreases during expansions. D) at a fixed rate that does not respond to changes in the economic condition.