Derive the interest parity condition and interpret it

If the growth rate of the quantity of money is 4 percent per year, potential GDP and real GDP grow at 3 percent per year, and velocity does not change, in the long run what is the inflation rate?

What will be an ideal response?

For purposes of monetary policy, the Federal Reserve has targeted the interest rate known as the

A) prime rate. B) Treasury bill rate. C) federal funds rate. D) discount rate.