Suppose that the velocity of circulation of money is constant and real GDP is growing at a constant 4 percent a year. To achieve an inflation target of 3 percent a year, at what rate would the central bank grow the quantity of money? The central bank would have to grow the quantity of money at percent a year.

Suppose that the velocity of circulation of money is constant and real GDP is growing at a constant 4 percent a year. To achieve an inflation target of 3 percent a year, at what rate would the central bank grow the quantity of money? The central bank would have to grow the quantity of money at percent a year.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles

Section: Chapter Questions

Problem 8E

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