Assume we know that the income velocity of M2 has remained constant, while M2 has increased by 6% and prices have increased by 4%.We can conclude that

Question

Quizplus · Accepted Answer

Since the income velocity of M2 is constant, nominal GDP growth equals M2 growth, which is 6%. With prices increasing by 4%, real GDP growth is nominal GDP growth minus inflation, which is 6% - 4% = 2%.

Assume We Know That the Income Velocity of M2 Has