If the economy is hit by a negative real Candice Butts Macro Quest

Question 57 / 142: If the economy is hit by a negative real shock that reduces real GDP growth below the Solow growth rate, which of the following is the appropriate monetary policy to move real GDP growth back to the Solow growth rate without raising inflation?

A No monetary policy can achieve that goal.

B Increase the growth rate of the money supply

C Decrease the growth rate of the money supply.

D Keep the growth rate of the money supply constant while lowering interest rates.

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Macroeconomics MCQ

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Candice Butts

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