Multiple Choice
You are the head of the central bank and you want to maintain 2 percent long-run inflation, using the quantity theory of money. If the real GDP growth is 4 percent and velocity is constant, you suggest a:
A) 6 percent interest rate.
B) 6 percent money supply growth.
C) 2 percent money supply growth.
D) 0 percent money supply growth.
E) 2 percent interest rate.
Correct Answer:
Verified
Correct Answer:
Verified
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