The Rules-Based Monetary Policy Reads: the Annual Growth Rate in the Money

Multiple Choice

The rules-based monetary policy reads: The annual growth rate in the money supply will be equal to the average annual growth rate in Real GDP minus the growth rate in velocity.If the average growth rate in Real GDP this year is 3 percent and the growth rate in velocity is 2 percent,then the money supply will increase by ______________ percent this year.

A) 1
B) 2
C) 3
D) 4