In an Economy in Which Velocity of Money in Circulation

question 75

Multiple Choice

In an economy in which velocity of money in circulation is constant and real output grows at an average rate of 3 percent per year,a 5 percent average rate of growth in the money supply would result in a:

• A)constant price level.
• B)slowly increasing price level.
• C)slowly decreasing price level.
• D)stable 4 percent growth in real GDP.
• E)stable 4 percent growth in nominal GDP.