The Federal Reserve econometric model predicts that a 2 percent increase in the money supply will increase real GDP after one year by
A) 1 percent.
B) 2.5 percent.
C) 2 percent.
D) 10 percent.

Question

Quizplus · Accepted Answer

The Federal Reserve econometric model predicts that a 2 percent increase in the money supply will typically have a less than proportional effect on real GDP, leading to a smaller increase, such as 1 percent, after one year. This reflects the complex relationship between money supply, spending, and economic output.

The Federal Reserve Econometric Model Predicts That a 2 Percent