Suppose that a rules-based monetary policy proposal specifies that the money supply will grow 5 percent each year. If velocity grows 2 percent this year and Real GDP grows 2 percent, the price level will __________ by __________ percent.
A. rise; 2
B. fall; 3
C. rise; 3
D. fall; 5
C. rise; 6
Answer: A. rise; 2
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What will be an ideal response?
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What will be an ideal response?
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