Multiple Choice
The money supply in Goldova is $50 billion. Nominal GDP is $400 billion and real GDP is $200 billion. The central bank of Goldova has instituted a policy of zero inflation. Assuming that velocity is stable, if real GDP grows by 10 percent this year, how will the central bank of Goldova change the money supply this year?
A) It will not change the money supply at all.
B) It will reduce the money supply by 10 percent.
C) It will increase the money supply by 10 percent.
D) It will increase the money supply by 1.0 percent.
Correct Answer:
Verified
Correct Answer:
Verified
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