Economists who favor the use of the rate of growth of the money supply as an indicator of monetary tightness or ease argue that if the Fed increases the money supply to keep interest rates stable,it is in danger of

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Economists who favor the use of the rate of growth of the money supply as an indicator of monetary tightness or ease believe that if the Fed increases the money supply to keep interest rates stable, it would increase the demand and supply of money, leading to an increase in prices, i.e. inflation. Hence, the danger is of increasing the price level, and the best choice is option D.

Economists Who Favor the Use of the Rate of Growth