Profitable investment is most effectively promoted when:
A)the money supply and price level are stable.
B)inflation is rising rapidly.
C)monetary policy is unanticipated.
D)persistent inflation increases uncertainty.

Question

Profitable investment is most effectively promoted when:
A)​the money supply and price level are stable.
B)​inflation is rising rapidly.
C)​monetary policy is unanticipated.
D)​persistent inflation increases uncertainty.

Quizplus · Accepted Answer

When the money supply and price level are stable, investors are more likely to have confidence in the economy and the stability of their investment. This creates an environment that encourages profitable investment. Inflation and uncertainty, as mentioned in answer choices B and D, can deter investment and make it more difficult to earn a profitable return. Monetary policy that is unanticipated, as in answer choice C, can create uncertainty and negatively impact investment decisions.

Profitable Investment Is Most Effectively Promoted When