Suppose That Velocity and Output Are Constant and That the Quantity

question 169

Multiple Choice

Suppose that velocity and output are constant and that the quantity theory and Fisher effect are both correct. If the nominal interest rate is 4 percent and inflation is 2 percent, what is the money supply growth rate or the real interest rate?

• A) The money supply growth rate is 2 percent.
• B) The real interest rate is 6 percent.
• C) The real interest rate is 4 percent.
• D) The money supply growth rate is 6 percent.

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Definitions:

Correlational Research

A method of study that examines the relationship or association between two or more variables without inferring a causal connection.

Archival Data

Information collected and stored in archives, including documents, records, and datasets that are used for research or reference.

External Validity

The extent to which the findings of a study can be generalized to other settings, populations, and times beyond the study conditions.

Independent Variable

A variable that is manipulated or changed in an experiment to see if it has an effect on the dependent variable.