According to the Quantity Theory of Money,if Both the Growth

question 36

Multiple Choice

According to the quantity theory of money,if both the growth rate of the money supply and the velocity of money are fixed,then a higher inflation rate means:

• A) a higher real growth rate.
• B) no change in the real growth rate.
• C) a lower real growth rate.
• D) a higher or lower real growth rate,depending on the specific growth rate of the money supply.

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Definitions:

Inflationary Gap

A situation where the demand for goods and services exceeds the supply, leading to inflation and an overheating economy.

Fiscal Policy

Alterations in expenditure and taxation by the government to control and impact the country's economic conditions.

National Debt

The sum of funds a nation's government has accumulated in debt, often due to spending more than its budget allows.

GDP

Gross Domestic Product represents the overall market value of all end products and services made inside a nation over a certain timeframe.