Suppose That Real GDP Grows by 3 Percent a Year

question 238

Multiple Choice

Suppose that real GDP grows by 3 percent a year, the quantity of money grows 5 percent a year, and velocity does not change.In the long run, the inflation rate equals

• A) 8 percent.
• B) 3 percent.
• C) 5 percent.
• D) 2 percent.
• E) 10 percent.

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Definitions:

18th Amendment

An amendment to the United States Constitution that established the prohibition of alcohol, making the production, transport, and sale of alcohol illegal from 1920 until its repeal in 1933.

14th Amendment

An amendment to the US Constitution that grants citizenship to all persons born or naturalized in the United States and prohibits states from denying any person life, liberty, or property without due process of law.

Due Process

A constitutional guarantee that prevents governments from impacting citizens in an unfair, arbitrary, or unreasonable manner, ensuring fair treatment through the normal judicial system.

Uniform Commercial Code

A comprehensive set of laws governing commercial transactions in the United States, intended to standardize practices across states.