In an economy in which real output grows at an average rate of 3 percent per year, a 7 percent average rate of growth in the money supply would result in

a. an inflation rate of 4 percent, if velocity were constant.
b. an inflation rate of -4 percent, if velocity were constant.
c. a $4 increase in the price level per year.
d. a $4 decrease in the price level per year.


A

Economics

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