If the Fed were required to maintain an absolutely constant growth rate of high-powered money,then the growth rate of the money supply
A)would be zero.
B)would be constant at the growth rate of H.
C)would be constant but not necessarily at the growth rate of H.
D)would fluctuate along with the parameters in the money-creation formula.

Question

Quizplus · Accepted Answer

The growth rate of the money supply would fluctuate because it depends on other factors like the reserve ratio and currency ratio, which can change even if the growth rate of high-powered money is constant.

If the Fed Were Required to Maintain an Absolutely Constant