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The real growth in the output of the economy is +1.5%; and inflation is 2.0%; what is the growth rate of money (the velocity of money is constant)?

  • The real growth in the output of the economy is +1.5%; and inflation is 2.0%; what is the growth rate of money (the velocity of money is constant)?  (4 Points)  What would happen if velocity was increasing by 1%?  (2 Points)  What would make velocity increase?  (4 Points)  If the Federal Reserve did not recognize or anticipate the increase in velocity, what would be the outcome in regards to the inflation rate?   (4 Points)
  • I do have the answer for the 1st part of the question. Please help. Thanks 

 

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