Suppose the Full-Employment Level of Real GDP Is Increasing at a Rate

question 63

Multiple Choice

Suppose the full-employment level of real GDP is increasing at a rate of 3% per period and the money supply is growing at a 3% rate. Using the equation of exchange, what is the value of the long-run inflation rate, assuming constant velocity?

• A) 6%
• B) 3%
• C) 1%
• D) 0%

---

Definitions:

Group Cohesiveness

The sense of solidarity, loyalty, and unity among members of a group, which fosters increased productivity and member satisfaction.

Deindividuation

A psychological state where an individual loses self-awareness and sense of individuality, often resulting in uninhibited and sometimes antisocial behavior.

Social Loafing

A reduction in individual effort when working in a group compared to working individually.

Homogeneity

The quality or state of being uniform or similar in nature or character.