Suppose That Velocity and Output Are Constant and That the Quantity

question 127

Multiple Choice

Suppose that velocity and output are constant and that the quantity theory and Fisher effect are both correct.If the nominal interest rate is 8 percent and inflation is 4 percent,what is the money supply growth rate or the real interest rate?

• A) The money supply growth rate is 4 percent.
• B) The real interest rate is 12 percent.
• C) The real interest rate is 8 percent.
• D) The money supply growth rate is 12 percent.

---

Definitions:

Liabilities

Financial obligations or debts a company owes to others that must be paid in the future.

Assets

Resources owned by a business or individual that have economic value.

FASB

The Financial Accounting Standards Board, an independent organization responsible for establishing accounting and financial reporting standards in the United States.

IASB

The International Accounting Standards Board, an organization that establishes accounting standards known as International Financial Reporting Standards (IFRS) that guide the preparation and reporting of financial statements globally.