A monetary policy rule that targets nominal GDP would ______ money growth when nominal GDP rises above the target and ______ money growth when nominal GDP falls below the target.
A) reduce; raise
B) raise; reduce
C) reduce; reduce
D) raise; raise

Question

Quizplus · Accepted Answer

A monetary policy rule that targets nominal GDP would reduce money growth when nominal GDP rises above the target to prevent overheating of the economy, and raise money growth when nominal GDP falls below the target to stimulate economic activity.

A Monetary Policy Rule That Targets Nominal GDP Would ______