Using the figure above, if inflation is lower in Canada than in the United States, it is likely that: A. aggregate output is smaller in Canada than in the United States. B. the United States has a smaller fiscal deficit. O C. the United States has lower interest rates. O D. the Canadian money supply is growing slower than the U.S. money supply.
Using the figure above, if inflation is lower in Canada than in the United States, it is likely that: A. aggregate output is smaller in Canada than in the United States. B. the United States has a smaller fiscal deficit. O C. the United States has lower interest rates. O D. the Canadian money supply is growing slower than the U.S. money supply.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
1
Transcribed Image Text:350
325
300
275 -
250 -
225 -
200 F
175
150
125
100
75
Aggregate Price Lovel
(GÖP Deflator)
50
Money Supply
25
Using the figure above, if inflation is lower in Canada than in the United States, it is likely that:
A. aggregate output is smaller in Canada than in the United States.
B. the United States has a smaller fiscal deficit.
C. the United States has lower interest rates.
D. the Canadian money supply is growing slower than the U.S. money supply.
Transcribed Image Text:Interest
Rate (%)
Money Growth Rate
(% annual rate)
16
16
14
- 14
Money Growth Rato (M2)
12
- 12
10
10
6.
4.
Interost Rate
-2
1950 1955 1960 1965 1970 1975
1980 1985 1990 1995 2000 2005 2010
Money Growth (M2 Annual Rate) and Interest Rates (Long-Term U.S. Treasury Bonds),
1950-2011
Using the figure above, we find that high growth rates in the money supply are most likely associated with a:
A. high rate of inflation and low long-term bond rates.
B. a high rate of inflation and high long-term bond rates.
OC. a low rate of inflation and low long-term bond rates.
O D. low rate of inflation and high long-term bond rates.
O O O O
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