The table below shows data for Brazil.
$$\begin{array} { | l | l | l | }
\hline & 2006 & 2007 \
\hline \begin{array} { l }
\text { Real GDP grow th } \
\text { rate }
\end{array} & 3.8 & 5.4 \
\hline \text { Inflation rate } & 4.2 & 3.7 \
\hline
\end{array}$$
Assuming the rate of velocity change is constant,
A) the money growth rate was -0.4 percent in 2006.
B) the growth rate of nominal GDP was 1.7 percent in 2006.
C) the demand for money curve shifted leftward in 2006.
D) the growth rate of money increased between 2006 and 2007.

Question

The table below shows data for Brazil.
$$\begin{array} { | l | l | l | } 
\hline & 2006 & 2007 \
\hline \begin{array} { l } 
\text { Real GDP grow th } \
\text { rate }
\end{array} & 3.8 & 5.4 \
\hline \text { Inflation rate } & 4.2 & 3.7 \
\hline
\end{array}$$
Assuming the rate of velocity change is constant,
A) the money growth rate was -0.4 percent in 2006.
B) the growth rate of nominal GDP was 1.7 percent in 2006.
C) the demand for money curve shifted leftward in 2006.
D) the growth rate of money increased between 2006 and 2007.

Quizplus · Accepted Answer

The growth rate of nominal GDP is the sum of the real GDP growth rate and the inflation rate. In 2006, it was 3.8% + 4.2% = 8%. In 2007, it was 5.4% + 3.7% = 9.1%. Assuming constant velocity, the money growth rate must have increased to accommodate the higher nominal GDP growth rate in 2007.

The Table Below Shows Data for Brazil Assuming the Rate of Velocity Change Is Constant, A) the l

The Table Below Shows Data for Brazil Assuming the Rate of Velocity Change Is Constant,
A) the l