What I answered was incorrect for both, what are the correct answers? If the mon

Question

What I answered was incorrect for both, what are the correct answers?

If the money supply is growing at a rate of 10 percent per year, real GDP (real output) is growing at a rate of 4 percent per year, and velocity is constant, what will the inflation rate be? %. (Enteryour response as an integer value.) If the money supply is growing at a rate of 10 percent per year, real GDP (real output) is growing at a rate of 4 percent per year, and velocity is growing at 1 percent per year instead of remaining constant, what will the inflation rate be? %. (Enter your response as an integer value.)

Explanation / Answer

1)

inflation = 10%-4%=6%

2)

inflation = 10%+1%-4%=7%

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