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Using the Equation of Exchange,if Real Output Increases by 5

Question 13

Multiple Choice

Using the equation of exchange,if real output increases by 5 percent per year and velocity is stable,in order to keep the price level stable


A) The interest rate must increase by 5 percent per year.
B) Velocity must increase by 5 percent per year.
C) The money supply must increase by 5 percent per year.
D) The money supply must increase by more than 5 percent per year because nominal output is greater than 5 percent.

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