When the rate of growth rate of money is constant:

Name: When the rate of growth rate of money is constant:
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Question

Quizplus · Accepted Answer

When the rate of growth of money is constant, the nominal interest rate is the real rate of interest plus the growth rate of money. Option A is incorrect because the inflation rate may or may not be growing depending on other factors. Option C is incorrect because the real money balance may remain constant if the increase in money supply is equal to the increase in goods and services.

When the Rate of Growth Rate of Money Is Constant