Asked by
Caitlin Lewis
on Oct 12, 2024Verified
It is generally agreed that when the rate of monetary growth exceeds the rate of growth in real GDP in the long run
A) the inflation rate will increase every year by a constant rate.
B) real GDP will grow at a faster rate.
C) the average price level will tend to decrease over time.
D) the average price level will tend to increase over time.
E) the inflation rate will decrease every year until it ultimately equals zero.
Monetary Growth
The increase in the quantity of money in an economy over time, which can influence inflation and economic activity.
Real GDP
Gross Domestic Product adjusted for inflation, providing a more accurate reflection of an economy's size and growth rate.
Average Price Level
The general level of prices for goods and services in an economy, which can be measured through indices like the Consumer Price Index (CPI).
- Identify the influence of interest rates and inflation on economic dynamics and personal actions.
- Differentiate between actual and nominal Gross Domestic Product and their connection with the expansion of money supply.
Verified Answer
HS
Learning Objectives
- Identify the influence of interest rates and inflation on economic dynamics and personal actions.
- Differentiate between actual and nominal Gross Domestic Product and their connection with the expansion of money supply.