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The effect of a decrease in the growth rate of the money

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The Effect of a Decrease in the Growth Rate of the Money Supply

The average annual growth rate of real GDP for the United States since World War II has been 3%. Suppose that the growth rate of velocity is 0%. What happens to the inflation rate if the money supply growth rate decreases from 5% to 2%? Assume that the growth rate of velocity remains 0% and that changes in the growth rate of the money supply do not affect the growth rate of real GDP.

Reference no: EM13321716

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