In the mid-1980s,velocity "fell off the rails," growing much slower than its historical trend of 3.4 percent.Had the Fed assumed a constant growth rate of 3.4 percent and maintained a constant growth rate of money supply rather than increasing the growth rate of the money supply as it did,
A) nominal GDP would have grown more slowly as would real GDP.
B) nominal and real GDP would have grown more rapidly.
C) nominal GDP would have grown more rapidly faster and GDP would have grown more slowly.
D) real GDP would have grown more rapidly faster and nominal GDP would have grown more slowly.
Correct Answer:
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