When the nominal interest rate is not constant,an increase in the growth rate of the money supply ________ the inflation rate,and ________ the debt-to-GDP ratio.

Question

Quizplus · Accepted Answer

When the nominal interest rate is not constant, an increase in the growth rate of the money supply can have an ambiguous effect on the debt-to-GDP ratio since it depends on other factors such as fiscal policy. However, an increase in the growth rate of the money supply typically increases the inflation rate due to the quantity theory of money.

When the Nominal Interest Rate Is Not Constant,an Increase in the Growth