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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

The annual average percentage change in Real GDP is 2.3 percent, and the annual average percentage change in velocity is 1.1 percent. Using the monetary rule discussed in the text, what percentage change in the money supply will keep prices stable (on average)?

To determine

The change in money supply.

Explanation

It is given that the annual percentage change in real GDP (%ΔQ) is 2.3 percent, and the annual average percentage change in velocity (%ΔV) is 1.1 percent.

It is known that the annual growth rate in money supply is equal to the difference between the average annual growth rate in real GDP and the growth rate in velocity. The change in money supply (%ΔM) can be calculated us

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