In 2018, assume the economy was at full employment with the following economic data: Real GDP: $7 billion Nominal interest rate: 5 percent Price level: 1.5 Velocity of circulation: 7 Required reserve ratio: 10%. a. Assume the central bank made an open market purchase in 2019, increasing the monetary base by $10 million. What is the increase to the money supply? b. In 2019 the velocity of circulation did not change, and real GDP grew by 5%. What was the inflation rate for 2019?

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