Please answer fast Suppose you are the Governor of the Bank of England. You want to apply the quantity theory of money toachieve a long-run inflation rate of 3% per year. If velocity is increasing by 1% per year, and real GDP grows atan annual rate of 2%, which of the following policies would you recommend?Select one:O a. Money supply growth of 4% per year.O b. Money supply growth of 6% per year.O c. A nominal interest rate of 5% per year.o d. A nominal interest rate of 3% per year.

As per the quantity theory of money,Money supply * Velocity of money = Price level * Real GDP

Suppose you are the Governor of the Bank of England. You want to apply the quantity theory of money to achieve a long-run inflation rate of 3% per year. If velocity is increasing by 19% per year, and real GDP grows a an annual rate of 2%, which of the following policies would you recommend? Select one: O a. Money supply growth of 4% per year. O b. Money supply growth of 6% per year. O C. A nominal interest rate of 5% per year. O d. A nominal interest rate of 3% per year.

Suppose you are the Governor of the Bank of England. You want to apply the quantity theory of money to achieve a long-run inflation rate of 3% per year. If velocity is increasing by 19% per year, and real GDP grows a an annual rate of 2%, which of the following policies would you recommend? Select one: O a. Money supply growth of 4% per year. O b. Money supply growth of 6% per year. O C. A nominal interest rate of 5% per year. O d. A nominal interest rate of 3% per year.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: The Short-run Trade-off Between Inflation And Unemployment

Section: Chapter Questions

Problem 4PA

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