Suppose That a Rules-Based Monetary Policy Proposal Specifies That the Money

Multiple Choice

Suppose that a rules-based monetary policy proposal specifies that the money supply will grow 5 percent each year.If velocity grows 2 percent this year and Real GDP grows 2 percent,the price level will __________ by __________ percent.

A) rise; 3
B) fall; 3
C) rise; 2
D) rise; 6
E) fall; 5