Suppose real gap and velocity of money remain constant. If money supply doubles, then the inflation...
Suppose real gap and velocity of money remain constant. If money supply doubles, then the inflation rate will be: A. 50% B. 200% C. 10% D. 100%
Homework Answers
The quantity theory of money states that
%change in money supply + %change in velocity = % change in price + %change in real output
Money supply doubles, therefore, %change in money supply =100.
100+0=inflation+0
Inflation will also change by 100%(D).
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Refer to the figure to answer the following questions.
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The figure below shows the growth in the money supply and
average inflation rates for 160 countries from 1991–2011. For most
countries, there is a one-to-one ratio between money growth and
inflation. For example, both the growth in the money supply and the
average inflation rate was close to 100% in Belarus.
Refer to the figure to answer the following questions.
1st attempt
Part 1 (1 point)
See Hint
Consider the countries that lie on the line, which shows a
one-to-one...
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the form of your answer: is velocity
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