In an Economy in Which Real Output Grows at an Average

Multiple Choice

In an economy in which real output grows at an average rate of 3 percent per year,a 7 percent average rate of growth in the money supply would result in a(n)

A) inflation rate of 4 percent,if velocity were constant
B) inflation rate of -4 percent,if velocity were constant
C) $4 increase in the price level per year
D) $4 decrease in the price level per year
E) change in the velocity of money