In an economy in which real output grows at an average rate of 3 percent per year, a 7 percent average rate of growth in the money supply would result in a(n):
a. inflation rate of 4 percent, if velocity of money in circulation is constant.
b. inflation rate of -4 percent, if velocity of money in circulation is constant.
c. $7 increase in the price level each year
d. $7 decrease in the price level each year.
e. increase in the velocity of money in circulation.
a
Economics
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