If the change in aggregate demand is small or temporary, a monetary growth rule will
A) probably function well.
B) not function well.
C) lead to a recession.
D) lead to inflation.

Question

Quizplus · Accepted Answer

A monetary growth rule would likely function well if the change in aggregate demand is small or temporary as it provides a stable and predictable guide for monetary policy. The rule would help avoid excessive increases in the money supply and inflation during times of high aggregate demand, but would also provide flexibility to support the economy during times of low aggregate demand.

If the Change in Aggregate Demand Is Small or Temporary