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 massive recession.
D) lead to inflation.

Question

Quizplus · Accepted Answer

A monetary growth rule is designed to stabilize the economy by adjusting the money supply according to a pre-determined rule. If the change in aggregate demand is small or temporary, the rule will likely function well because the adjustment in the money supply will be small and the impact on the economy will be limited.

If the Change in Aggregate Demand Is Small or Temporary,a