If the money supply growth rate permanently increased from 4 percent to 12 percent,what would we expect to happen to the inflation rate and the nominal interest rate?

Question

Quizplus · Accepted Answer

According to the quantity theory of money and the Fisher effect, a permanent increase in the money supply growth rate would lead to a proportional increase in the inflation rate, and the nominal interest rate would also increase by the same amount.

If the Money Supply Growth Rate Permanently Increased from 4