Using the Equation of Exchange,if Real Output Increases by 5

question 13

Multiple Choice

Using the equation of exchange,if real output increases by 5 percent per year and velocity is stable,in order to keep the price level stable

• A)The interest rate must increase by 5 percent per year.
• B)Velocity must increase by 5 percent per year.
• C)The money supply must increase by 5 percent per year.
• D)The money supply must increase by more than 5 percent per year because nominal output is greater than 5 percent.

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