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Question

uassessment/takelaunch.jp?course_assessment_id.128031_1&course-ide-98758-1;&contenUd.21; ! : rthe growth rates of nominal GDP and real GDP in an economy are 6% ind 2% respectively, the inflation nte in the economy must be: B. 396. Oc.4%. D. 896. QUESTION 7 The ratio of nominal GDP to money supply is referred to as O A price index. O B. Fischer's ratio. O C. velocity O D. inflation ratio. QUESTION 8 The quantity theory of money implies that OA growth rate of money demand growth rate of money supply O B growth rate of money supply growth rate of nominal GDP O C. growth rate of money supply growth rate of real GDP O D. growth rate of currency in circulation growth rate of the price level

Explanation / Answer

6. Ans: 4%

Explanation:

Inflation rate = nominal GDP - real GDP = 6% - 2% = 4%.

7. Ans: Velocity

Explanation:

The quantity theory equation is

MV = PY

V = PY / M

Where, PY is nominal GDP

M is money supply

V is velocity of money

8. Ans: growth rate of money supply = growth rate of nominal GDP.

Explanation:

Quantity theory of money States that if money supply grows by a certain percentage, nominal GDP needs to grow by the same percentage.

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