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

question 62

Multiple Choice

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

• A) the money growth rate lead one-for-one to changes in the inflation rate in the long run.
• B) the money growth rate lead one-for-one to changes in the inflation rate, but only in the short run.
• C) velocity lead one-for-one to changes in the inflation rate.
• D) 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 is correct.

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