If Long-Run Real GDP Growth Is Determined by Real Changes

question 68

Multiple Choice

If long-run real GDP growth is determined by real changes in the economy, the quantity theory of money implies that:

• A) changes in the money growth rate lead one-for-one to changes in the inflation rate in the long run
• B) changes in the money growth rate lead one-for-one to changes in the inflation rate but only in the short run
• C) changes in velocity lead one-for-one to changes in the inflation rate
• D) changes in the money growth rate lead to a greater than one-for-one change in the inflation rate in the long run
• E) None of these answers are correct.

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