Suppose the annual growth rate in real GDP is 3.5 percent. If the money supply grows at an annual rate of 4 percent we would expect:

Name: Suppose the annual growth rate in real GDP is 3.5 percent. If the money supply grows at an annual rate of 4 percent we would expect:
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Question

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When the money supply grows at a faster rate than the real GDP, it can lead to an increase in demand for goods and services, causing the prices to rise, which results in inflation. Therefore, the best choice is A, inflation.

Suppose the Annual Growth Rate in Real GDP Is 3