Movements in the growth rate of the money supply are
A)procylical.
B)countercyclical.
C)unrelated to the business cycle.
D)difficult to identify because the federal government has stopped collecting data on the money supply.

Question

Quizplus · Accepted Answer

Movements in the growth rate of the money supply tend to be procylical, meaning that they move in the same direction as the business cycle. For example, during periods of economic expansion, the demand for money increases, and banks respond by increasing the money supply. On the other hand, during periods of economic contraction, the demand for money decreases, and banks respond by reducing the money supply.

Movements in the Growth Rate of the Money Supply Are