Suppose That Monetary Neutrality and the Fisher Effect Both Hold

question 99

Multiple Choice

Suppose that monetary neutrality and the Fisher effect both hold and the money supply growth rate has been the same for a long time.Other things the same a higher money supply growth would be associated with

• A)both higher inflation and higher nominal interest rates.
• B)a higher inflation rate,but not higher nominal interest rates.
• C)a higher nominal interest rate,but not higher inflation.
• D)neither a higher inflation rate nor a higher nominal interest rate.

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