Suppose that velocity and output are constant, and that the quantity theory and Fisher effect are both correct. If nominal interest rates are 6.5 percent and the inflation rate is 2.0 percent it follows that the money supply growth rate is 2.0 percent. Bit follows that the money supply growth rate is 4.5 percent. it follows that the real interest rate is 4.5 percent. it follows that the real interest rate is 2.0 percent. Both A and C

Suppose that velocity and output are constant, and that the quantity theory and Fisher effect are both correct. If nominal interest rates are 6.5 percent and the inflation rate is 2.0 percent it follows that the money supply growth rate is 2.0 percent. Bit follows that the money supply growth rate is 4.5 percent. it follows that the real interest rate is 4.5 percent. it follows that the real interest rate is 2.0 percent. Both A and C

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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