Suppose That for a Given Year Money Growth Is 5

question 54

Multiple Choice

Suppose that for a given year money growth is 5 percent, real GDP growth is 2 percent, and the inflation rate is 5 percent. According to the growth version of the quantity equation, velocity growth would be

• A) 0 percent.
• B) 2 percent.
• C) 8 percent.
• D) 12.5 percent.

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Definitions:

Nominal Exchange Rate

The rate at which the currency of one country can be exchanged for the currency of another country, not adjusted for inflation.

Net Exports

The value of a country's total exports minus its total imports, representing the net amount of a nation's goods and services traded with the rest of the world.

Appreciates

Refers to an increase in the value of an asset or currency relative to another.

Money Demand Curve

A graph showing the relationship between the quantity of money people want to hold and the interest rate.