Assuming velocity is constant, the rate of inflation equals the difference between the rate of:
A)unemployment and the rate of economic growth.
B)growth in the money supply and the rate of growth in nominal GDP.
C)growth in real wages and the rate of growth in real GDP.
D)growth in the money supply and the rate of growth in real GDP.

Question

Quizplus · Accepted Answer

The rate of inflation is determined by the difference between the growth rate of the money supply and the growth rate of real GDP, assuming velocity is constant.

Assuming Velocity Is Constant, the Rate of Inflation Equals the Difference