Multiple Choice
Use the following diagram to answer the following questions.
-Suppose monetary authorities allow the money supply to grow at a constant rate of 3 percent. During this same period, the economy experiences inflation. What is the most likely explanation for this phenomenon?
A) A decrease in the income velocity of money.
B) An increase in the income velocity of money.
C) A decrease in investment.
D) An increase in the growth rate of GDP.
Correct Answer:
Verified
Correct Answer:
Verified
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