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

question 93

Multiple Choice

Suppose the full-employment level of real GDP is increasing at a rate of 4% per period. If policymakers are committed to keeping the long-run inflation rate at 3% per period, then what is the targeted money growth rate, assuming constant velocity?

• A) 7%
• B) 4%
• C) 1%
• D) -1%