Economists who propose a constant-money-growth-rate rule often argue that setting the annual growth rate in the money supply equal to the average annual growth rate in Real GDP
A) maintains price level stability over time.
B) is a way to raise Real GDP.
C) will cause the price level to fall over time.
D) a and b
E) a,b and c

Question

Quizplus · Accepted Answer

Setting the annual growth rate in the money supply equal to the average annual growth rate in Real GDP helps maintain price level stability over time. This is because the money supply is growing at the same rate as the economy, reducing the risk of inflation or deflation. However, it does not necessarily cause an increase in Real GDP.

Economists Who Propose a Constant-Money-Growth-Rate Rule Often Argue That Setting