From the quantity equation we find that the rate of inflation is equal by definition to the growth rate of nominal GDP ________ the growth rate of real GDP.

Question

Quizplus · Accepted Answer

The rate of inflation is calculated by subtracting the growth rate of real GDP from the growth rate of nominal GDP. This is because inflation represents the portion of nominal GDP growth that is not accounted for by real GDP growth, indicating an increase in prices rather than in the quantity of goods and services produced.

From the Quantity Equation We Find That the Rate of Inflation