The table below shows data for Indonesia. $$\begin{array} { | l | c | c | }
\hline & \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\hline \text { Real GDP growth rate } & 4.5 & 6.0 \
\hline \text { Inflation rate } & 4.8 & 5.7 \
\hline
\end{array}$$
Assuming the rate of velocity change is constant,the money growth rate in Indonesia was

Question

The table below shows data for Indonesia. $$\begin{array} { | l | c | c | } 
\hline & \mathbf { 2 0 0 9 } & \mathbf { 2 0 1 0 } \
\hline \text { Real GDP growth rate } & 4.5 & 6.0 \
\hline \text { Inflation rate } & 4.8 & 5.7 \
\hline
\end{array}$$
Assuming the rate of velocity change is constant,the money growth rate in Indonesia was

Quizplus · Accepted Answer

According to the Quantity Theory of Money, mv = pq, where m is the money supply, v is the velocity of money, p is the price level, and q is the real output. Assuming that velocity is constant, the growth rate of money will be equal to the difference between the growth rates of nominal GDP (p*q) and real GDP (q). Therefore, the money growth rate in Indonesia was:
- 0.3% (4.8% - 4.5%) in 2009
- 11.7% (17.7% - 6%) in 2010
Therefore, the correct answer is B.

The Table Below Shows Data for Indonesia Assuming the Rate of Velocity Change Is Constant,the Money Growth