According to the Quantity Theory of Money, If the Monetary

question 71

Multiple Choice

According to the quantity theory of money, if the monetary authorities allow the money supply to grow at a rate of 6 percent in an economy that is growing by 2 percent in real terms, then inflation will be:

• A)2 percent.
• B)4 percent.
• C)6 percent.
• D)8 percent.

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