Targeting money growth will lead to stable output growth only if
A)money demand and velocity change proportionally with output.
B)fiscal policy remains unchanged.
C)money demand and velocity are stable.
D)the IS curve is steep.

Question

Quizplus · Accepted Answer

If money demand and velocity are stable, targeting money growth can lead to stable output growth as well. Factors such as fiscal policy changes and the steepness of the IS curve can impact the relationship between money growth and output growth. However, if money demand and velocity are unstable, targeting money growth may not lead to stable output growth.

Targeting Money Growth Will Lead to Stable Output Growth Only