If Real GDP Grows at 4 Percent, the Quantity of Money

question 233

Multiple Choice

If real GDP grows at 4 percent, the quantity of money grows at 6 percent, and velocity does not change, then in the long run the inflation rate is

• A) 4 percent.
• B) 6 percent.
• C) 10 percent.
• D) 2 percent.
• E) 1.5 percent.

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Definitions:

Linear Production

A production process where outputs increase in direct proportion to the amounts of inputs, implying a constant ratio of output to input in production functions.

Pairs of Socks

Articles of clothing worn on the feet, typically coming in matching sets of two, one for each foot.

Linear Production

A production process that assumes a direct, constant relationship between inputs and outputs, often illustrated with a straight-line production function.

Green Beans

A type of common vegetable, long and slender, typically harvested while still young and tender.