You are the head of the central bank and you want to maintain 2-percent long-run inflation.Using the quantity theory of money,if real GDP growth is 4 percent and velocity is constant,you suggest a __________.
A)4 percent money supply growth
B)6 percent interest rate
C)2 percent money supply growth
D)0 percent money supply growth
E)none of the above

Question

Quizplus · Accepted Answer

The Answer of You are the head of the central bank and you want to maintain 2-percent long-run inflation.Using the quantity theory of money,if real GDP growth is 4 percent and velocity is constant,you suggest a __________.
A)4 percent money supply growth
B)6 percent interest rate
C)2 percent money supply growth
D)0 percent money supply growth
E)none of the above

You Are the Head of the Central Bank and You