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What will happen to the inflation rate if the rate of growth

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Reference no: EM13321709

The average annual growth rate of real GDP for the United States is about 3%. Assume that the growth rate of velocity is 0%, and the rate of growth of the money supply is 4%.

a. What is the current rate of inflation?

b. What will happen to the inflation rate if the rate of growth of the money supply increases to 7%?

c. What will happen to the inflation rate if the rate of growth of the money supply increases to 7%, and, at the same time, the growth rate of velocity increases to 2%?

Reference no: EM13321709

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