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    Exam 21:Output, Inflation, and Monetary Policy
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    Use the Equation of Exchange to Show That in the Long
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Use the Equation of Exchange to Show That in the Long

Question 54

Question 54

Essay

Use the equation of exchange to show that in the long run, inflation must equal money growth less the growth of potential output.

Correct Answer:

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The equation of exchange is MV = PY; if ...

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