In the medium run,an increase in the rate of growth of nominal money will cause
A)lower nominal and lower real interest rates.
B)lower nominal interest rates and no change in the real interest rate.
C)an increase in inflation and an increase in output growth.
D)a proportionate increase in inflation.

Question

Quizplus · Accepted Answer

In the medium run, an increase in the rate of growth of nominal money typically leads to a proportionate increase in inflation, as per the quantity theory of money, assuming velocity and output growth are constant.

In the Medium Run,an Increase in the Rate of Growth