The Growth Rate of Real GDP in Astoria Is 7

question 63

Multiple Choice

The growth rate of real GDP in Astoria is 7.5%.Assume the growth rate of velocity is constant at a rate of 5%.If Astoria wishes to decrease the inflation rate from the annual rate of 5.99% to a target rate of 4.5% and maintain its current growth rate of real GDP,what will the growth rate of the money supply need to be?

• A) 6.49%
• B) 7%
• C) 8%
• D) 8.49%

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Definitions:

Debt Securities

Financial instruments representing money borrowed that must be repaid, including corporate and government bonds, which provide interest income to the holder.

High Liquidity

Refers to assets that can quickly be converted into cash with minimal impact on their price.

High Risk

Referring to investments or activities with a greater than usual potential for loss or that may involve significant uncertainty.

Equity Method

An accounting technique used to record investments in other companies where the investor has significant influence but not full control.