Suppose Velocity Is Constant, but Real GDP Is Not Independent

question 167

Multiple Choice

Suppose velocity is constant, but real GDP is not independent of the money supply. If this is the case, a 10 percent increase in the money supply will:

• A)raise inflation by 10 percent.
• B)raise inflation by less than 10 percent.
• C)raise inflation by more than 10 percent.
• D)have an unpredictable effect on inflation.

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