The Money Supply in Freedonia Is $100 Billion

Multiple Choice

The money supply in Freedonia is $100 billion.Nominal GDP is $800 billion and real GDP is $400 billion.The central bank of Freedonia has instituted a policy of zero inflation.Assuming that velocity is stable,if real GDP grows by 20 percent this year,how will the central bank of Freedonia change the money supply this year?

A) It will not change the money supply at all.
B) It will reduce the money supply by 20 percent.
C) It will increase the money supply by 20 percent.
D) It will increase the money supply by 2.0 percent.