(Solution)-The rate of growth of the money supply

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22. The rate of growth of the money supply isa) 8% or less b) more than 8% but not more than 10%c) more than 10% but not more than 12% d) more than 12%23. Suppose "the" multiplier is 3, the money multiplier is 6 and the income multiplier with respect to the money supply is 4. The government increases spending by $12 billion, but because the economy is operating at full capacity it wants to use monetary policy to offset the impact this will have on income. The central bank shoulda) buy $1.5b bonds b) buy $9b bonds c) sell $1.5b bonds d) sell $9b bonds24. Suppose velocity is increasing by 1% per year, the long-run real rate of growth is 2%, and the rate of money supply growth is 10%.Long-run inflation isa) 7% b) 8% c) 9% d) 10%

 

Solution ID:10086540 | Question answered on 16-Oct-2016

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